February 24, 2009

Ethanol's Economic Contribution in 2008

In what has become an annual report, John Urbanchuk of LECG LLC has released a report on the economic contribution of the ethanol industry in 2008.

The following summarizes the economic contribution of the American ethanol industry.

  • The full impact of the spending for annual operations, ethanol transportation, capital spending for new plants under construction, and R&D spending added $65.6 billion to the nation’s Gross Domestic Product (GDP) in 2008.
  • New jobs are created as a consequence of increased economic activity caused by ethanol production. The increase in economic activity resulting from ongoing production, construction of new capacity, and R&D supported more than 494,000 jobs in all sectors of the economy during 2008.
  • Increased economic activity and new jobs result in higher levels of income for American households. The economic activities of the ethanol industry put an additional $19.9 billion into the pockets of American consumers in 2008.
  • The ethanol industry more than paid for itself in 2008. The combination of increased GDP and higher household income generated an estimated $11.9 billion in tax revenue for the Federal government and nearly $9 billion of additional tax revenue for State and Local governments. The estimated cost of the two major Federal incentives in 2008, the Volumetric Ethanol Excise Tax Credit (VEETC) and ethanol Small Producer Credit, totaled $4.7 billion. Consequently, the ethanol industry generated a surplus of $7.1 billion for the Federal treasury.
  • Ethanol reduces our dependence on imported oil and reduces the U.S. trade deficit. The production and use of ethanol displaces crude oil needed to manufacture gasoline. According to the Energy Information Administration imports account for more than 65 percent of our crude oil supplies and oil imports are the largest component of the expanding U.S. trade deficit. The production of nine billion gallons of ethanol means that the U.S. needed to import 321.4 million fewer barrels of oil in 2008 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 $32 billion in 2008.3 This is money that stayed in the American economy.


No comments:

Post a Comment