November 18, 2008

Ethanol generates $50 billion in tax revenues

Since 1978, the ethanol industry has generated more than $50 billion in tax revenues - $33.4 billion for the federal government and nearly $17 billion for state and local governments, according to an analyst with LECG LLC. (Figures are in 2008 dollars.)

A Nebraska Corn Board news release noted that LECG's John Urbanchuk reported that ethanol reduced America's tab for imported oil by $97.5 billion since 1978 and reduced farm program payments by more than $3 billion annually since 2006. By his math, that that brings the total return on investment for each dollar expended in the form of a federal tax incentive for ethanol use to nearly 5 to 1.

Don Hutchens, executive director of the Nebraska Corn Board, said the numbers "aren't surprising" and that an analysis of the impact of ethanol production in Nebraska shows similar returns.

In 2006, Nebraska had 12 operating ethanol plants that generated more than $18 million in tax revenues, added more than $1.3 billion in economic output to the state and contributed nearly $100 million in household income, which translates to $40 million in retail spending. Ethanol production in the state has doubled since then.

Hutchens also addressed critics that continue arguing corn should be cheaper - noting that corn prices have fallen by more than half from their highs this summer and may actually be below the cost of production for some corn growers.

Here's his quote: Arguing that we should reduce ethanol production and increase our dependence on foreign oil just so some food companies can have even bigger profits doesn't make sense. One would think these companies would push for alternatives to oil, helping to keep their own energy costs low, because we've all seen what can happen when there's no competition in the energy sector. These groups simply continue to distort the facts and, honestly, their attempts to dump renewable fuels for more oil didn't make sense six months ago and doesn’t make sense now, either.

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