Ethanol Continues to Provide Unmatched Future Economic Opportunities For U.S.

Washington DC February 15, 2010; While not unscathed by the tumultuous economic climate that gripped the U.S. and the world in 2009, American ethanol producers continued to press forward contributing generously to the economy of the U.S. In the annual analysis, “The Economic Contribution of the Ethanol Industry to the Economy of the United States,” economist John Urbanchuk details the significant economic impact ethanol production represents. Among the key findings:

• The increase in economic activity resulting from ongoing production, construction of new capacity, and R&D supported nearly 400,000 jobs in all sectors of the economy during 2009.

• The economic activities of the ethanol industry put an additional $16 billion into the pockets of American consumers in 2009.

• The full impact of the spending for annual operations, ethanol transportation, capital spending for new plants under construction, and R&D spending added $53.3 billion to the nation’s Gross Domestic Product (GDP) in 2009.

• The production of 10.6 billion gallons of ethanol means that the U.S. needed to import 364 million fewer barrels of oil in 2009 to manufacture gasoline, or roughly the equivalent of five percent of total U.S. crude oil imports. The value of the crude oil displaced by ethanol amounted to $21.3 billion in 2009.

“Despite the well documented economic concerns of the ethanol industry in 2009, producers across the nation remain a critical economic engine in rural America,” said Renewable Fuels Association President Bob Dinneen. “Unlike other sectors of the economy, this industry added production, helped Americans keep their jobs, and continued to provide an unparalleled value-added market for farmers across the country.”

In addition, the ethanol industry continues to pay for itself. Critics of the industry often lament the tax incentives designed to spur the increased use of ethanol, often singling out only the cost of the incentives and not the benefits that they accrue. This is extremely shortsighted and misleading. According to Urbanchuk:

“The combination of increased GDP and higher household income generated an estimated $8.4 billion in tax revenue for the Federal government and nearly $7.5 billion of additional tax revenue for State and Local governments. The estimated cost of the two major Federal incentives in 2009, the VEETC and ethanol Small Producer Credit, totaled $5.0 billion. Consequently, the ethanol industry generated a surplus of $3.4 billion for the Federal treasury.”

The true economic benefit of ethanol is felt in communities in which biorefineries operate. An analysis of the impact of an average-size ethanol plant finds the support of more than 1,500 jobs across the economy, an additional $275 million to the state GDP, and $50 million in increased incomes for residents.

Read the entire study HERE.