Economical Impacts of Economical Impacts of EthanolEthanol

TaxTax

Partial Excise Tax Exemption- allows Partial Excise Tax Exemption- allows marketers to sell the ethanol-blended marketers to sell the ethanol-blended fuels at a reduced price.fuels at a reduced price.

To promote the ethanol industry, the To promote the ethanol industry, the government has allowed ethanol to be government has allowed ethanol to be produced and sold at a lower tax rate produced and sold at a lower tax rate than petroleum fuel.than petroleum fuel.

TaxTax

Ethanol is presently exempt from 5.3 of Ethanol is presently exempt from 5.3 of the 18.3 cents federal gasoline tax.the 18.3 cents federal gasoline tax.

TaxTax

According to the American Coalition for According to the American Coalition for Ethanol: Ethanol:

““The economic activity attributable to the The economic activity attributable to the ethanol industry will generate $3.5 billion in ethanol industry will generate $3.5 billion in additional income tax revenue over the next additional income tax revenue over the next five years -- $1 billion more than the cost of the five years -- $1 billion more than the cost of the exemption. The U. S. ethanol industry will exemption. The U. S. ethanol industry will create a net gain to the taxpayers of almost create a net gain to the taxpayers of almost $4 billion over the next five years.”$4 billion over the next five years.”

EmploymentEmployment

Ethanol plants are presently employing people Ethanol plants are presently employing people in at least 20 states across the countryin at least 20 states across the country

This industry is responsible for providing This industry is responsible for providing 40,000 jobs nationwide40,000 jobs nationwide

These jobs provide $1.3 billion each year to These jobs provide $1.3 billion each year to U.S. familiesU.S. families

It is projected that the ethanol industry will It is projected that the ethanol industry will provide over $12.6 billion in wages over the provide over $12.6 billion in wages over the next 5 yearsnext 5 years

What this means to the U.S. What this means to the U.S. EconomyEconomy

Each year the ethanol industry (directly Each year the ethanol industry (directly and indirectly) adds $6 billion to the U.S. and indirectly) adds $6 billion to the U.S. economyeconomy

Agricultural BenefitsAgricultural Benefits

In 1994, 535 million bushels of corn were In 1994, 535 million bushels of corn were used for ethanol production.used for ethanol production.

In 2001, 667 million bushels of corn were In 2001, 667 million bushels of corn were used for ethanol. used for ethanol.

The demand for corn and other The demand for corn and other agricultural commoditiesagricultural commodities created by the created by the ethanol industry increases crop values.ethanol industry increases crop values.

TradeTrade

Ethanol production decreases the dependence Ethanol production decreases the dependence on oil from foreign countrieson oil from foreign countries

Imported oil makes up about 56% of the oil Imported oil makes up about 56% of the oil used in the U.S presentlyused in the U.S presently

Ethanol productionEthanol production also results in livestock also results in livestock feed co-products, such as corn gluten, which feed co-products, such as corn gluten, which may be traded to foreign countries may be traded to foreign countries

Economic Concerns of the Economic Concerns of the ConsumerConsumer

Cost of ethanol-blended gasoline is often the Cost of ethanol-blended gasoline is often the same or lower than standard gasoline to the same or lower than standard gasoline to the consumerconsumer

Ethanol blending can increase the octane Ethanol blending can increase the octane levels of gasoline for a relatively low pricelevels of gasoline for a relatively low price

1 gallon of ethanol added to 9 gallons of 1 gallon of ethanol added to 9 gallons of gasoline will raise the octane level of the gas to gasoline will raise the octane level of the gas to the next level (i.e. regular to premium,etc.)the next level (i.e. regular to premium,etc.)

ReferencesReferences

American Coalition of EthanolAmerican Coalition of Ethanolhttp://www.ethanol.orghttp://www.ethanol.org