Should the Missouri Legislature require all diesel fuel sold in Missouri be blended with corn and soybean oil? A bill passed by the House and currently in the Senate would require that diesel fuel sold in Missouri consist of 5 percent biodiesel by volume until April 2024 and 10 percent thereafter for seven years. The bill also mandates that half of the biodiesel content come from Missouri-grown and raised crops and animals. Biodiesel is a type of diesel fuel made from renewable, biodegradable materials such as plants, animal fats, and oils.
Supporters of the bill argue that the mandate makes sense because customers ask for biodiesel and it would support local industries. Yet if biodiesel truly is popular, a mandate wouldn’t be needed to convince people to buy it. Supporters also argue that this mandate would be a good way to support Missouri farmers, as it would require half of the mandated biodiesel to be made from Missouri-grown materials. Forcing everyone to buy a certain state industry’s product is not only a heavy-handed way to “support local industry” but also certain to give rise to legal challenges. Has anyone heard of the Commerce Clause?
Detractors of the bill argue that biodiesel is more expensive at the pump than regular diesel and that mandating a more expensive fuel will harm the state’s economy. While prices do fluctuate, the true cost of biodiesel appears to be more expensive than regular diesel, although the price at the pump is trending downward. In 2015, biodiesel was 12 cents per gallon more expensive than regular diesel. In 2019, biodiesel cost roughly the same as diesel in the Midwest and was actually less expensive than diesel when calculating a nationwide average. But this calculation omits the current subsidies that biodiesel producers receive each year of $1 per gallon of biodiesel produced. Without these subsidies, that extra dollar will show up in the price at the pump.
The prudent course of action is to let the market work. If biodiesel is truly popular and cheaper than regular diesel, a mandate is not necessary. A mandate, particularly as this one is drafted, amounts to little more than a handout to certain farmers at the expense of anyone who buys diesel fuel.
