Thursday, August 16, 2007

Biofuels Enemies Can't Back Up Economic Disinformation

The last year the media has been filled with establishment organizations criticizing the cost to the government of the tax exemption for distributors blending ethanol with their gasoline. I have heard representative of both The Heritage Foundation and the Cato Institute say that these provisions in the Energy Policy Act of 2005 are “disastrous” acts by the government and that they “distort the free market”. CNBC has been especially aggressive in promoting this view.
The “think tank experts” never provide any data to back up these statements but they do prefer that large incentives continue go to the oil companies so they will be encouraged to find more oil. They also apparently feel that we should ignore strategic costs of supporting the government owned oil industries of our enemies- in the name of global free enterprise. In short helping out oil companies (either local or foreign government owned) = “good” and helping out our American ethanol industry = “bad”!

Well, the economic impact data for ethanol movement in 2006 is in. Let us examine it.

The following is a summary from the report “Contribution of the Ethanol Industry to the Economy of the United States” The summary and full report are found at these two sites:

RFA - Media Center - RFA Press Releases - 2007 Archive -Ethanol Industry Providing Sound Returns on Investment

RFA - Resource Center - Reports & Studies.

The most important points are:

1. In 2006 the federal government received tax revenues of $2.7 billion simply from the construction and operation of biofuel refineries. This is in comparison to the $2.5 billion tax exemptions granted by the federal government to oil refiners who blend ethanol-and cited by naysayers as a “waste of money”. In addition, the ethanol industry will generate nearly $2.2billion of additional tax revenue for State and Local governments.

2. The American ethanol industry alone produced nearly five billion gallons of ethanol. This meant that the US needed to import 206 million fewer barrels of oil-valued at $11.2 billion. This is money that all stayed in the American economy instead of flowing out of the country. I have never heard this mentioned in the media.

3. The operation and construction of ethanol bio-refineries spurred the creation of 163,034 jobs in all sectors of the economy in 2006. These include nearly 20,000 jobs in America’s manufacturing sector -- American jobs making ethanol from grain produced by American farmers. How about that? An American manufacturing sector that is growing!

Not included in the report was the expected savings to the federal government in grain subsidies of several billion dollars because the price of corn now exceeds the supported price. We no longer need to pay farmers not to grow corn while buying its equivalent in oil from foreign nations.

To me this just does not sound like the “economic disaster” and “waste of taxpayer money” that I have heard expressed on both network and channel news programs. I have not heard these favorable numbers mentioned or challenged in the major media.

It would seem to be newsworthy-where are the reporters?

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