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Bio Fuel Mandate is Foolish

David Williams on 2012-06-27 13:25:01

After billions of dollars spent on a myriad of subsidies and year after year of failed policies, the government has now found a new way to force an uncompetitive industry into the marketplace.  This time it is forcing the Navy to increase the consumption of biofuels.  Like the government’s previous attempts, this one is bound to fail.  Washington has no right to demand the type of fuel the Navy chooses for its fleet. 

Coercing the Navy and other branches of the armed services to use a product to prop up an industry for the sake of furthering a political agenda is not only imprudent, it’s downright bad public policy. Given that other attempts to create a market for biofuels have and will continue to fail, the government has discovered that there’s no better way to guarantee a market, albeit an artificial one, than to implement a policy forcing the purchase of a product.  

Not only is it an unwise use of taxpayer dollars, the attempt to force an industry into commercialization before the market has a demand for it is a futile effort.  There’s no hindrance that precludes the private sector from moving forward with building out the biofuels industry if it were in fact economically viable.  The government understands that on its own the market has not taken to biofuels, and this is how it justifies the contrived need to get the industry off the ground by having the Navy increase its consumption. 

Washington further rationalizes this policy by contending that it will reduce the nation’s dependence on foreign oil, decrease costs and better serve our troops in battle.  However, reality does not support any of these assertions.  Let’s examine the claims one by one.

MYTH #1:  Reduces dependence on foreign oil.  First, it’s important to address and debunk the flawed contention that we our running out of oil, and likewise must reduce our dependence on it.  The reality is that the U.S. alone has a ton oil still waiting to be tapped, and this fact should assuage concerns about dependence on foreign, potentially hostile, oil producers.  Furthermore just because some politicians think that it is essential to end dependence on foreign oil, it still doesn’t excuse the purported need to subsidize an alternative like biofuels.  Additionally, using biofuels in the military will do very little to affect world oil consumption.

But don’t take TPA’s word for it, let’s examine a government-sponsored study the RAND Corporation released last week.  The report explains, “As fuel purchasers, neither the Air Force nor DoD has enough power to influence the world oil market. Their fuel purchases are simply too small.”

MYTH #2:  Decreases costs. The RAND report addresses this issue succinctly when it notes that “Alternative liquid fuels do not offer DoD a way to appreciably reduce fuel costs.”  If you still remain unconvinced, a WSJ article also cited a 2011 report commissioned by the Pentagon which “found that replacing half the conventional fuel with alternative fuel could add $800 million to $2.2 billion a year to the Defense Department fuel bill by 2020, unless the price of crude oil rises significantly.”  

MYTH #3:  Better serves our troops.  Not only are biofuels more expensive than oil, they also place our troops at a greater risk in the battlefield.  Just like petroleum-based fuels, biofuels must be transported through what are likely to be dangerous areas to reach our troops that need refueling.  However unlike their petroleum-based counterparts, biofuels possess lower fuel densities.  This means using biofuels will require more trips to refuel, and as a result increasing the possibilities our troops will be attacked.  Additionally, the RAND report also explains this fact.  “…Alternative fuels do not appear to offer direct military benefits…they offer no particular military benefit over their petroleum-derived counterparts.”

This appalling policy not only puts politics over national security, it also irresponsibly wastes taxpayer dollars –particularly abhorrent because the “benefits” of biofuels are as dubious as these.  At least some politicians are beginning to recognize what a foolish use of taxpayers this program is.  As The Wall Street Journal recently reported, “Lawmakers in both houses of Congress last month voted to stop the Navy from buying any more of the still-pricey alternative fuel [biofuel] and to keep the Pentagon from investing $170 million in biofuel refineries.”

Senator John McCain put the argument concisely by noting, “Using defense dollars to subsidize new-energy technologies is not the Navy’s responsibility.”  To go even a step further, it is not the responsibility of the government to use taxpayer dollars to prop up an industry. Regardless of how the government attempts to spin this project, it remains a thinly veiled attempt to promote a political agenda.

Given the serious fiscal problems our nation faces, it is absolutely imperative that Washington prioritizes its spending and programs.  When it comes to eliminating ineffective programs, this biofuels project is one that rightfully should get the boot. Until there is a demand in the market for biofuels, try as they might Washington politicians can’t create one. It’s about time they stop wasting our dollars trying to do so. 

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