Ethanol plan is a tax hike on Iowans

Source: By Don Burd, The Gazette • Posted: Sunday, March 21, 2021

 

The Otter Creek Country Store in Robins on Friday, Apr. 1, 2016. (Rebecca F. Miller/The Gazette)
The Otter Creek Country Store in Robins on Friday, Apr. 1, 2016. (Rebecca F. Miller/The Gazette)
When you think about what makes Iowa’s economy strong, choice, convenience and affordability come to mind. Business owners like myself and hundreds of others across the state meet these three criteria through the fuels we provide to consumers. These principles are at the core of who we are, and we are proud to fuel Iowans every day.

Offering fuel choices at the pump, including homegrown biofuels, is critical. It keeps our economy diverse, competitive and healthy. Over the years, biofuels’ support among fuel operators, retailers and distributors in Iowa has been made clear: 87 percent of all gasoline gallons sold in Iowa now contain ethanol.

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As the last line in the supply chain to customers, we know how to grow biofuels. We are committed to expanding higher blends with the right tools in the marketplace. Unfortunately, a new government mandate threatens this process and the very ability for us to do business.

These consequences are far-reaching. The proposed fuel mandate will put small businesses out of work, including the very businesses looking to sell more biofuels in rural communities. That is because this mandate will bring a $1 billion price tag forced on the backs of local business owners, causing us to pass on the costs to consumers. Enacting legislation that essentially acts as a tax increase on consumers at the pump is not the way to do business.

There is a better way to expand Iowa biofuels, but attempting a mandate is the wrong approach. First and foremost are the steep infrastructure requirements. Contrary to some claims, the reason why fuel retailers can’t offer higher blended fuels is not a business problem — it’s an infrastructure problem. We must make significant upgrades because the vast majority of our current fuel infrastructure can’t safely dispense these higher blends. Our businesses would need to replace tanks, piping and dispensers and tear up our concrete, leaving stations out of work for months while costing upward of $500,000 per fueling site.

Many convenience store owners cannot meet these crippling costs and will be forced to go out of business. For other small business owners, the convenience store going out of business might be their only fuel option in the community.

Secondly, consumer choice will be eliminated as we know it. Iowans like to have options at the pump. Various industries that choose to do business in Iowa prefer different fuel types for their equipment and operations — requiring one fuel type at all but one position and labeling that fuel as “restricted” use is not a healthy market for consumer choice.

Thirdly, fuel costs will be higher. Today’s marketplace allows for the competition that keeps prices low. With a mandate that picks winners and losers, prices will inevitably go up. Not only does this hurt business, but it ultimately hurts the consumers who expect fuel prices in Iowa to remain low. In neighboring Minnesota, where a similar mandate was enacted, diesel prices and the average price for a bushel of soybeans are higher than in our state.

There is a better way forward. Through private investments, consumer education and targeted incentives, we can genuinely expand biofuels and equip the businesses needed to sell them. HSB 185 and SF 549 include $11.25 million in incentives for ethanol infrastructure projects, which won’t even come close to the estimated $1 billion cost increase it will take to upgrade our infrastructure and fully meet the mandate’s requirements. Meaningful and targeted infrastructure reform is needed to make these upgrades over time.

Remember, small businesses are the link to making Iowa’s fuel distribution network successful — for consumers, farmers and businesses alike. My business in Robins has worked hard to expand our offerings. Forcing a mandate instead of trusting businesses to make the best decisions for themselves is a shortsighted approach.

Iowa has become the number one biofuel producing state and has kept growing for decades, all without a mandate. By supporting markets — and not mandates — Iowans in every community can access a full slate of affordable fuel options to meet their needs.

Don Burd owns Otter Creek Country Store in Robins.

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