WASHINGTON, DC – A University of Missouri study shows that Indiana would suffer significant job losses and a severe decline in economic activity if the tariff on foreign-subsidized ethanol is allowed to lapse at the end of the year.
The University of Missouri analysis found that Indiana would see job losses of 2,747 in the first year after the tariff lapses, 7,752 in the second year, and 10,610 in the third year. The year-to-year economic declines in Indiana would reach $618 million in the first year, $1.7 billion in the second year, and $2.3 billion in the third year after the tariff lapses.
The study results were released by Growth Energy, the coalition of U.S. ethanol supporters. Earlier, Growth Energy endorsed legislation introduced by Reps. Earl Pomeroy, D-N.D., and John Shimkus, R-Ill., which would extend the tariff, as well as the tax credit for cellulosic ethanol production and the Volumetric Ethanol Excise Tax (VEETC).
“Rural America would pay a steep price to remove the tariff on foreign-subsidized ethanol. This study shows it in stark details. We’d see billions of dollars and hundreds of thousands of jobs drain out of the America economy – most of that pain being felt in the heartland,” said Tom Buis, CEO of Growth Energy.
Nationally, the study found year-to-year job losses go from 39,506 in the first year after the tariff lapses, to 115,624 in the second year, and 161,384 in the third year. Job losses continue year-after-year and most of these jobs are never regained, according to the 10-year projection performed by the University of Missouri’s Community Policy Analysis Center.
The decline in economic activity following the lapse of the tariff was calculated at $9.2 billion the first year, $26.4 billion the second year, and $36.7 billion the third year – and remaining in the double digits during the 10-year projection, hitting $21.2 billion in 2021.
“We urge Congress to move rapidly to maintain the tariff. This would prevent foreign-subsidized ethanol from undercutting American ethanol companies and putting American workers out of a job. And ultimately it makes no sense to replace our addiction to foreign oil with an addiction to foreign ethanol,” Buis said.
The Missouri study found that the six states that would see the largest declines in economic activity due to removal of the ethanol import tariff are (in order): Iowa, Illinois, Nebraska, Minnesota, Indiana and South Dakota. Manufacturing – already a hard-hit sector of the economy – would see the largest decline, followed by the service industry, financial services, and wholesale trade sectors. The Missouri study predicted steep drops in value for corn, wheat, barley and sorghum.
A separate study conducted by IHS Global Insight predicted that without the tariff, Brazilian ethanol imports would climb to as high as 2 billion gallons a year – but displace domestic ethanol, and virtually no oil. The Global Insight study also predicted a 24-month plunge in corn prices due to the decrease in domestic ethanol production.
“This independent analysis confirms what we’ve been saying all along. Since the domestic ethanol industry has an arbitrary regulatory cap on its access to the marketplace, removing the tariff doesn’t displace a single drop of foreign oil – but only serves to smother U.S. ethanol, which is the only large-scale domestic alternative we have to foreign oil,” Buis said.
About Growth Energy
Growth Energy is a group committed to the promise of agriculture and growing America’s economy through cleaner, greener energy. Growth Energy members recognize America needs a new ethanol approach. Through smart policy reform and a proactive grassroots campaign, Growth Energy promotes reducing greenhouse gas emissions, expanding the use of ethanol in gasoline, decreasing our dependence on foreign oil, and creating American jobs at home. More information can be found at GrowthEnergy.org.