Ethanol and the Economy

Following the enactment of the RFS and EISA in 2005 and 2007 respectively, ethanol production in the United States has steadily increased. In tandem with this increase, more ethanol plants have been established and more jobs have been created which in turn has had a tremendous impact on the economy.

In Minnesota, the state's 20 ethanol plants spent $1.8 billion to produce 1.18 billion gallons of ethanol in 2016, according to a study by ABF Economics.

In the study, ABF Economics concluded that Minnesota' ethanol industry contributed $1.98 billion to the state's economy in 2016, generated $6.67 billion in revenue for Minnesota businesses, $1.47 billion in household income, supported 17,952 full time jobs and paid $80 million to state and local taxes.

The ethanol industry’s expenditure included corn, industrial chemicals, electricity, natural gas, water, labor and services such as maintenance, insurance and general overheads. Spending for these goods and services represented the purchase of output of other industries that operate in Minnesota.

Jobs supported by the ethanol industry in 2016 included employment in ethanol production, agriculture, construction, retail trade, healthcare, natural gas distribution, banking and finance, real estate, accounting, legal services, wholesale trade and transportation.

 

Nationwide, a 2016 study by ABF Economics commissioned by the Renewal Fuels Association (RFA) indicates that the ethanol industry contributed $42 billion to America’s economy in 2016 through annual operations of ethanol production, co-product output, agriculture, investments in research and development and construction.

According to the study, which can be obtained here, the ethanol industry directly employed 70,911 Americans in 2016. Including indirect and induced jobs – such as those in agriculture, transportation, retail trade and services sectors – that number rose to 339,175 jobs.

The study adds that the ethanol industry’s economic activities in 2016 contributed $22.5 billion in household income.

Furthermore, the study shows that the ethanol industry has provided a tremendous boost for the corn industry. In 2016, the ethanol industry consumed 5.43 billion bushels of corn valued at $18.72 billion worth. Without the ethanol industry, demand and prices for corn would dramatically fall.

Not included in any of the economic numbers is the potential economic activity spurred by savings consumers make when using fuels with higher ethanol blends such as E85 and E15 which are on average priced lower than regular E10.