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Ethanol: Literature Review - page 6 / 17

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5.1

Economics in the United States

The ethanol industry stimulates the economy by providing over 55,000 jobs and increasing corn prices and rural income. Ethanol production offers enormous potential for income, growth and employment in smaller, rural communities where plants are often located.

From 1996 to 2002, the ethanol industry will add $51 billion to the entire U.S. economy. Farm income for crop producers will be $2.2 billion or nearly 3% higher each year because of ethanol production. For example, the price of corn increases 8- 10 cents per bushel for every hundred million bushels of corn used to produce ethanol. The ripple effects on the price of other commodities adds two cents per bushel to the price of wheat and 10-13 cents per bushel to the price of soybeans. Many states have economic incentives as well to encourage the development of the ethanol industry. Some offer state tax incentives for ethanol blends or financial incentives or a combination of both. South Dakota offers a 2 cent per gallon exemption from state gasoline taxes for ethanol blends, and a payment of 20 cents per gallon to those who produce ethanol from South Dakota agricultural products.

The federal ethanol program saves the government more than $555 million a year by generating household and farm income, which increases federal income tax revenue. Each dollar's worth of up-stream and on-farm economic activity attributable to ethanol production generates $3.20 in downstream economic stimulus. Technology has reduced the cost of ethanol production by over 50% in the last ten years. (http://www.sdcorn.org/ethecon.html) (http://www.ethanol.org/)

5.2

Ethanol and the Canadian Economy Fuel Ethanol can benefit the economy as well as the environment. Production of

ethanol fuel in Canada (and around the world) will provide a new market for agricultural products-improving financial stability and security for farmers- in addition to direct and indirect employment opportunities for all aspects of ethanol production: from farming to transportation and manufacturing; Commercial Alcohol's Chatham Plant will realize the potential of these opportunities. All totaled, the Chatham plant will create 400 directly related jobs. (http://www.comalc.com/fuel ethanol.htm)

There are many benefits to the economy when ethanol is involved. The following is a list of some of these benefits. To get more information on these topics visit the Canadian Greenfuels web page at http://www.greenfuels.org/ethaecon.html.

  • 1.

    Ethanol can substitute for aromatic hydrocarbons, which include the carcinogen benzene. Ethanol can also replace MMT.

  • 2.

    Canada’s growing dependence on imported light crude oil needed for gasoline and diesel fuel manufacture.

  • 3.

    The cost (financial and environmental) of mega-projects for enhancing Canadian domestic supplies of light crude oil.

  • 4.

    The net economic benefit of a domestic ethanol industry.

  • 5.

    The abundant, and renewable, supply of Canadian grain available for fuel ethanol production.

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