Ethanol Industry Pays Off Subsidies, Boosts U.S. Economy (Bigtime)

Ethanol Plant

An economic analysis released February 25th shows major gains for the U.S. job market and GDP from 2007’s ethanol industry boom (emphasis added):

The analysis, conducted by John Urbanchuk of LECG, LLC, determined that the increase in economic activity resulting from ongoing production and construction of new capacity supported the creation of 238,541 jobs in all sectors of the economy during 2007. These include more than 46,000 jobs in the U.S. manufacturing sector. The goods and services required to produce the estimated 6.5 billion gallons in 2007 added $47.6 billion to the Gross Domestic Product and raised household incomes by $12.3 billion.

While the gains themselves aren’t all that surprising, they may turn the conventional wisdom that “ethanol subsidies are bad” on its head since increased tax revenue actually paid them off:

The resulting economic activity from the domestic production of ethanol also paid dividends in the form of lower government expenditures and higher tax revenues. In 2007, the tax incentives provided for the production and use of ethanol totaled $3.4 billion. However, the increased tax revenue collected by the Federal Treasury totaled $4.6 billion. Moreover, state and local governments saw tax revenues increase by $3.6 billion.

Here’s to an industry that can’t be outsourced, and it points to a bright future for the renewable fuels industry in the United States. Subsidies arent always just hand-outs — they can be good investments, too. And as we’ve seen lately, new non-food based ethanol and biodiesel technologies may be ready for prime-time soon.

Related Posts:

Europe Faces Biodiesel Feedstock Crunch; Subsidies Play A Role

Popular Mechanics: Ethanol Subsidy Bill Bad News (Feb. 25, 2008): Analysis: Ethanol industry was economic bright spot in 2007

See the full report here.

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In a past life, Clayton was a professional blogger and editor of Gas 2.0, Important Media’s blog covering the future of sustainable transportation. He was also the Managing Editor for GO Media, the predecessor to Important Media.