An earlier study by researchers at USDA concluded that grain ethanol produces twice the energy than goes into its production. Now, USDA's Economic Research Service has completed an economic study that shows ethanol helps our economy and puts money back into the household budget. The conclusion is that increasing the use of ethanol will not only reduce our nation's dependence on foreign oil, but create economy-wide benefits.
The economists report: replacing petroleum gasoline with less expensive ethanol would reduce domestic spending on motor fuels. This reduction would occur as long as ethanol is competitive with imported petroleum oil. The cost savings from reduced motor fuel expenditures are passed on to households. The Department of Energy expects the price of ethanol to remain competitive at about $2 a gallon, with oil going higher than $100 a barrel by 2020.
As the report asserts, success in meeting the RFS depends on overcoming some challenges, but the long-term gains to the economy from increased production of ethanol, are clear. If we truly want to reduce our dependence on foreign oil, create jobs and improve our environment, we must increase the use of biofuels in our fuel system.
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