A Dirty Secret: U.S. Taxpayers footing bill for “Splash and Dash”, Dumping subsidized Biodiesel in Europe

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Men go mad in herds but only come to their senses one by one.” – Charles Mackay, the 19th-century Scottish journalist

Our elite U.S. Congress has a loophole in a bill that is using American taxpayers’ money to help pay for biodiesel being shipped overseas to Europe. Have your heard of the “Splash and Dash” program? The United States was accused of dumping subsidized biodiesel back in October of 2007.

“Splash and Dash” Biofuel program costing Americans Millions of Dollars says lawmakers.

A lawmaker says U.S. taxpayers are being bilked to the tune of millions of dollars by a biofuel subsidy that helps to lower fuel prices in Europe, and he’s leading the charge to close the apparent loophole.

“In 2007 this subsidy cost the American taxpayer $300 million, and it’s projected to cost the American taxpayers $600 million in 2008,” said Rep. John Shadegg, R-Ariz.

Basic overview of “splash and dash”:

Biodiesel is produced abroad using South American sugar cane or Asian palm oil (Rain forests are being destroyed to produce palm oil) and shipped to the United States, where it’s blended with just a “splash” of regular diesel.

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A typical tanker-load of about 9 million gallons of biodiesel requires just 9,000 gallons of American diesel to make it qualify for the subsidy. But every gallon in the shipment garners a buck. The ship then makes a “dash” for Europe, where its fuel is sold below market rates.That means each tanker-load that makes the dash nets importers about $9 million dollars in tax credits from the IRS. Lawmakers have estimated its cost to Americans at tens — or even hundreds — of millions each year.

“We really haven’t found out the names of the companies who are profiting from it,” Shadegg said. “I think the bad actors are the members of Congress who are allowing this to happen.”

Now why would someone in Congress want to support this scam and let the American taxpayer foot the bill?

Well, our ear marks wielding Congress more than likely earmarked a special loophole for an importer or campaign supporter to be included in the biofuel subsidy when 9,000 gallons regular diesel is added to a full tanker (big boat) of 9 million gallons of biodiesel. The end result is a 9 million dollar kickback (tax credit) made to the importer and (you and me), the unknowing taxpayer, is footing the bill. The subsidy is deducted right off the importers tax form each year.

Up to 10% of biofuel exports from the US to Europe are believed to be part of the rogue scheme reaping big profits for agricultural trading firms.

And while Congress and the National Biodiesel Board say they know the loophole is being exploited — as America is exporting much more biofuel than it’s producing — they’ve been unable to identify the guilty companies. So the biodiesel importers are not worried about the American business that needs biodiesel to run its operations instead of using 100% diesel. Instead, the importer is shipping the biodiesel overseas to get the extra $1.00 per gallon for their own benefit.

“Ultimately when you dig down it gets to the point that you would have to have access to IRS information,” said Manning Feraci, vice president of federal affairs at the National Biodiesel Board. “Taxpayer information is confidential, so we can’t have access to it.”

Shadegg wants to end “splash and dash” by eliminating the subsidy for any biodiesel exported from the United States, which he says harms energy independence. Shadegg is pushing his bill in the House, which has already passed measures to stop the scam.

I wonder which members of Congress are benefiting from the “splash and dash” loophole. The people who wrote the loophole know about it and it appears Congress is trying to keep it quiet except for Congressman Shadegg. We can sit back and let this ripoff continue, or, we can call our Congress person and Senators and tell them we know about “splash and dash” and we want the loophole closed for good. No exceptions.

Contact List for U.S. Senators

Contact List for U.S. House of Representatives

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2 Responses to A Dirty Secret: U.S. Taxpayers footing bill for “Splash and Dash”, Dumping subsidized Biodiesel in Europe

  1. chemicallygreen.com June 28, 2008 at 1:02 pm #

    How many people have contacted their Representatives and Senators?
    Chemically Green

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  1. Some Pig: Bailout Dollars Allocated to Green Projects - October 17, 2008

    […] 5. Splash and dash. The bill clarifies that credits do not apply to alcohol fuels and biodiesel produced outside of the US for use outside of the US. This eliminates the credit previously available to producers who broght B100 to the US, added 0.1 percent diesel, and shipped B99.9 to Europe while qualifying for a $0.999 tax credit But the credit remains for exported biodiesel, which will not please regulators in Europe considering anti-dumping action against the US for permitting subsidized biodiesel exports. Folks, the tax credit has not been eliminated only shifted. The U.S. taxpayer will still be paying for the $8 million dollar tax credit on every tanker load exported overseas. Check out Chemically Green Post: Dirty Secret, U.S. Taxpayers Paying for… […]

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