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American Ethanol Producers Contribute Generously to the US Economy

For a while now, the Americans decided to become energy independent. President Obama announced a series of steps his Administration is ready to take in order to make this possible. The President said that the focus will be on biofuel, which is already an important industry in the United States.

In the annual analysis “The Economic Contribution of the Ethanol Industry to the Economy of the United States,” economist John Urbanchuk detailed the significant economic impact ethanol production represents, such as:

  • 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.”

Though many say that the tax incentives offered for this ethanol producers are not correlated with the benefits, Urbanchuk says that this industry pays for itself:

“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.”
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