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By Jim Martin, Doug Oathout Erie Times-News staff bloggers
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Posted: January 4th, 2013
Erie’s Hero BX: Tax credit adds little to the bottom line

A Jan. 1 vote by the U.S. House of Representatives not only extended Bush-era tax cuts, it left in place a $1-a gallon tax credit for the production of biofuel.

Executives at Erie-based Hero BX, one of the nation’s largest producers of biofuel, acknowledge, however, that they no longer consider the credit essential to their business.

“We never pushed for it one way or another,” said Mike Noble, president of Hero BX. “We always kept a neutral position.”

Far more important, he said, are state and federal mandates that require biofuel, produced from a wide range of waste oil products, to be blended with petroleum-based diesel fuel. Pennsylvania, for instance, requires 2 percent biofuel to be used.

That’s provided Hero BX, which sold about half the 40 million gallons it produced in 2012 to Pennsylvania customers, a reliable market for its product.

But the tax credit won’t improve the bottom line for Hero BX.

“This benefits our customers more so than it does because of the way the program is structured,” Noble said. “When we sold our biodiesel to our customers, they paid full price. Our customers took the risk of the dollar coming back to them as a rebate.”

In past years, Noble had pushed publicly for the mandate. But even then he acknowledged the tax credit, expected to cost taxpayers $1.3 billion this year, wouldn’t be needed forever.

In short, Hero BX closed down for a time last fall when the Pennsylvania mandate was temporarily suspended. Take away this tax credit and Petersen expects the lights would stay on and more than 40 workers would keep working at the Erie plant.

“We feel the mandates (are) more critical to our business than the subsidy,” Peterson said. “They have a way bigger impact.”

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