Ohio’s Biofuel Mandate

As my colleague Ashe Schow points out,  lobbyists for the biofuel industry are lining up in the halls of the Capitol to plead their case for millions of taxpayer dollars to subsidize the biofuel industry.  You know, that’s the same industry that – thanks to the ethanol mandate – caused the price of tortillas in Mexico to rise nearly 400% a few years ago due to bidding up the price of corn.  Unfortunately, it’s also the same industry that believes that government, and not the free market, will be the impetus behind solving the mythical “silver-bullet” cellulosic ethanol dilemma that continues to elude the laws of science.

Oh, if we could just throw more money at it somehow it will solve itself.  Right…

Interestingly, at the same time all this is taking place, there was a little nugget of related news coming out of the Buckeye State – aka Ohio.  Apparently, state law requires state agencies to purchase a set quantity of biodiesel fuel for their vehicles ever year.  One agency – and it’s a biggie – the Ohio Department of Transportation, absorbs approximately 85% of that total fuel mandate!

(Now, the actual law (ORC 125.834) includes a progressive usage scale that began at 1 million gallons in 2007 with an increase of 100k per year.  Mindless bureaucratic details for some other day, for sure.)

According to Ohio’s State Auditor David Yost, this unnecessary mandate cost Ohio taxpayers north of $3.3 million over the last 4 years – roughly $800k annually – in order to buy a blend of fuel that does nothing more than prop up a market-denying, heavily subsidized industry built upon conjecture and pump-priming.

In a statement, Auditor Yost said:

“While the intentions of using biodiesel are good, government must be cost-effective.  The option to return to regular diesel fuel ensures that taxpayers receive the best value for their dollar.”

Now there’s a novel idea; government should be cost effective and taxpayers should receive the best value for the tax dollar.  Whodathunkit?

All the more concerning is that as recently as last year, Ohio faced a $6-8 billion deficit (depending on whose figures you’re using) that was closed by newly-elected Governor John Kasich.  The governor took a lot of the proverbial sticks & arrows as he deftly scaled back government operations and reigned-in spending*.  In the end, the deficit was eliminated and a balanced budget enacted without raising taxes.

You see, Ohio, unlike Congress, has a constitutional requirement to have a balanced budget.  There is an old saying that rings more and more true every day; if you take care of the pennies, the dollars will take care of themselves.  A million here and a million there and soon you’re talking about real money.

*This law is still on the books. If Governor Kasich wants an easy way to save taxpayer money, he should follow the Auditor’s advice and work to eliminate ORC 125.834.

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