Is Governor Scott right when he signed into law HB4001?
By Roger Caldwell
American lawmakers create laws that help their friends and no one knows why they are important. Governor Scott signed into law HB4001, which repealed a bill that was passed in 2008, that required gasoline sold in Florida to contain 10 percent ethanol. Opponents of the bill said it would send a chilling message to biofuels investors and hurt job creation in the state.
The bill was opposed by bio-energy companies, but Governor Scott signed it into law last week anyway. CEO Paul Woods of Algenol, a bio-energy company said his company’s plan to invest $400 million in the state has been jeopardized with the governor’s decision. The company was getting ready to build its first commercial production facility producing 15 to 20 million gallons of ethanol from algae and employing hundreds of employees.
Initially, I was upset that our governor was losing hundreds of jobs, but then I realized that the bill did not make a difference because the federal law superseded the state law. The federal government pays oil companies $6 billion a year to blend ethanol into our gasoline. For 33 years the federal government has mandated that our gasoline would be mixed with ethanol, and the oil companies would receive 45 cents for every gallon of gas.
Ethanol production is not going a-way, and Governor Scott signing a bill will not change the use of ethanol in gasoline. Many government officials do not believe that oil companies should receive a subsidy, but ethanol companies will be in greater demand in the future. The national Biofuels Board chaired by the Energy Secretary is considering raising the 10 percent ethanol level now in our gasoline to 15 percent. They believe this will lower our dependence on imported oil.
Proponents of the renewable fuel standard argue that 45 percent of the demand for foreign oil decreased because of ethanol production. The addition of ethanol blends into the gasoline has reduced the price by $1.09 a gallon.
Many of the opponents to the renewable fuel standard charge that this type of policy places the government in a position to pick winners and losers. As the government continues to raise the amount of ethanol in the gasoline, the car companies will be forced to build flexible fuel vehicles, whose engines can use 85 percent of ethanol.
The global expansion of biofuel industry has contributed to higher food prices and a shortage of land for food-based agriculture. Governor Scott is correct when he says that ethanol is causing a shortage of cattle feed for Florida ranchers and helping to raise food prices. But in Brazil, some of their cars use 100 percent of ethanol to operate their vehicles, and they have created a new industry that employ thousands of workers.
The biofuel industry is growing and the State of Florida will be forced to make adjustments with food-based agriculture. There are thousands of jobs in the biofuel industry that are available to Florida, and investors are searching for visionary governors. There is an abundance of economic opportunities in the renewable biofuel industry, and wasting time with legislature that is superseded by Federal law makes no sense.
