An Economic Case for Ethanol

by Todd Neeley (DTN The Progressive Farmer) ... Industry growth is likely to come as higher blends such as E15 and E85 become more widely available and more widely used.

A recent analysis by the Iowa Renewable Fuels Association this week makes the connection between the wider availability of E15 and consumer savings at the pump. Based on an analysis of a recent Iowa Department of Revenue motor fuel report, the IRFA said if E15 was widely available across the state drivers could save more than $50 million a year in fuel costs.

Iowa Department of Revenue data shows Iowa motorists purchased more than 1.2 billion gallons of E10 last year. The EPA already approved the use of E15 in model year 2001 and newer passenger vehicles and flex-fuel vehicles. That represents more than 80% of the fuel consumed in the U.S. On average, E15 is typically sold at a 5-cent discount to E10 in Iowa, according to IRFA.

Even though gasoline prices are low, the group said in a news release Thursday that if only 20% of Iowa motorists used E15, Iowans could save $12.7 million per year.

In Nebraska, the University of Nebraska-Lincoln's Department of Agricultural Economics released a report, http://agecon.unl.edu/ethanolimpacts, outlining the growth of the nation's second-largest ethanol industry.

In 2014 there were 1,301 full-time equivalent employees for Nebraska's 24 plants. "The prevailing wages, salary and benefit information indicates there was $71 million associated with those jobs," the study said. "The estimated proprietor's income for the facilities was $34 million for a combined total of $106 million. Indirect business taxes are another component and they were estimated at $13 million based on data from the Nebraska Department of Revenue from property taxes paid by each facility."

For 2010 to 2014 the total employment effects varied between 3,900 and 4,900 jobs. "The effects for labor income, output and indirect business taxes demonstrate the significant economic impact of the ethanol industry in Nebraska. The overall impact was $4,994 million in 2014. The cumulative impact over the five years was $26,155 million. The results confirm that the ethanol industry provides ongoing employment and a sustained economic impact for the state of Nebraska."

The report outlines a number of interesting aspects of the dried distillers grains market in the state. Most notably, "The ethanol industry produces a value that averages 67% of the value of all corn produced and 57% when compared to cattle sales. Over the past five years ethanol and distillers' grain production exceeded the value of soybean production." READ MORE and MORE (Nebraska Ethanol Board) Download Iowa Study Download Nebraska Study