Another Study on Ethanol's Benefits

February 21, 2001

Nebraska Governor Mike Johanns, chairman of the Governors' Ethanol Coalition, has released an analysis outlining how the increased use of ethanol will spur the domestic economy, save consumers billions, create jobs, and reduce the influence of OPEC over the United States. With the nation stuck in a protracted energy crisis, greatly due to growing dependence on expensive foreign oil, ethanol industry executives believe the report demonstrates there is one environmentally-friendly energy policy option that can prevent America's economy from being held hostage by OPEC: ethanol.

"Consumers are paying the price for the failure to develop adequate domestic energy resources," said Eric Vaughn, president, Renewable Fuels Association. "Our nation is facing its most serious energy crisis in 25 years. Domestic oil production is down, imports of petroleum and refined products are up, and natural gas supplies cannot keep up with rising demand. As our nation forges a comprehensive national energy policy to deal with these mounting problems, ethanol can and should be an integral part of the domestic energy solution."

According to the analysis, prepared by economist John Urbanchuk, executive vice president of AUS Consultants, "Rising oil prices are a major contributor to the current economic slowdown." Due to OPEC's influence on world oil, "increases in crude oil prices can be viewed as a 'tax' imposed by foreign oil producers on American consumers." Increased use of ethanol reduces the amount of oil we import and "will reduce the amount of 'tax' that American consumers are forced to pay." Instead of relying on the good will of foreign oil sheiks, the U.S. should consider that "every acre of land that produces biomass used to make ethanol becomes an oil patch that never runs dry."

The study also found that quadrupling the use of ethanol over the next 15 years would save consumers $57.5 billion, add $685 billion to real GDP, increase household income by nearly $186 billion and create more than 156,000 new jobs. The benefits do not include the implications on farm income that would result from the expanding domestic market for grain and other agricultural products.

To view the report, go to the Internet address: www.ethanolRFA.org/pubs_reports.html.