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How much does business-as-usual cost? This morning, Green Car Congress reported that the US is projected to pay $440 billion for imported petroleum in 2008:
The increase to the estimated $440 billion for 2008 is based on an average $90 per barrel crude oil price for the year. In 2002, before the current bull market for oil began, US oil imports cost less than $103 billion. The preliminary figures for last year came to some $327 billion.
With little prospect for cheaper gas prices in the future, any decrease in the US export bill will have to come from a reduction in petroleum usage.
Which brings to mind two important questions:
- What percentage of our Gross Domestic Product will the US have to export before things start to change dramatically?
- Where is all this money going, anyway?
An economic analysis released February 25th shows major gains for the U.S. job market and GDP from 2007’s ethanol industry boom (emphasis added):
The analysis, conducted by John Urbanchuk of LECG, LLC, determined that the increase in economic activity resulting from ongoing production and construction of new capacity supported the creation of 238,541 jobs in all sectors of the economy during 2007. These include more than 46,000 jobs in the U.S. manufacturing sector. The goods and services required to produce the estimated 6.5 billion gallons in 2007 added $47.6 billion to the Gross Domestic Product and raised household incomes by $12.3 billion.
While the gains themselves aren’t all that surprising, they may turn the conventional wisdom that “ethanol subsidies are bad” on its head since increased tax revenue actually paid them off:
