E15 infrastructure bill would add $35.9M to Minnesota GDP

Source: By Minnesota Bio-Fuels Association • Posted: Thursday, April 6, 2017

An infrastructure bill in the Minnesota House and Senate that calls for expanding access to E15 would contribute $35.9 million to the state’s GDP, according to an analysis by ABF Economics.

House File 1257 and Senate File 1277 seeks to provide a one-time funding of $12.5 million to fuel retailers and fuel wholesalers to install equipment necessary to store or dispense E15. This funding would enable an estimated average of 150 retail stations to offer E15.

This investment, ABF Economics said, would not only translate to a $35.9 million contribution to Minnesota’s GDP, but also support 276 full-time jobs, generate $25.5 million in household income and pay $1.4 million in state and local taxes.

In 2016, the ethanol industry contributed $1.98 billion to Minnesota’s GDP, supported 17,954 jobs, generated $1.47 billion in household income and paid $79.7 million in state and local taxes. With this infrastructure bill, the annual contribution from the ethanol industry to Minnesota would be $2.02 billion in GDP, 18,230 jobs, $1.5 billion in household income and $81.1 million in state and local taxes.

Expanding the number of stations offering E15 by 150 could potentially increase annual E15 usage in Minnesota between 120 million gallons and 150 million gallons. This in turn would help the state meet its target of increasing biofuels in transportation fuel.

According to Minn. Stat 239.7911, biofuels should comprise 25 percent in transportation fuel by 2020. As of 2015, biofuels comprised 12.47 percent of transportation fuel in Minnesota. Increasing access and usage of E15 would certainly help us meet the goals set in Minn. State 239.7911.

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After hitting a six-month low the second week of March, April ethanol contracts gained buyer support over the rest of the month as seasonal buying moved into the market. Traders have moved into both ethanol and RBOB gasoline markets over the past several weeks as commercial buying increases ahead of the spring and summer driving season. The current price of gasoline is also likely to spark increased sales and driving activity over the next several months.

Ethanol futures have posted a 10-cent rally since hitting support levels. This has continued to spark additional follow-through buyer activity in not only ethanol markets, but all energy markets through the end of March and early April. This is expected to continue as overall inventory of ethanol and gasoline will likely be drawn down through the next couple of months. Prices are expected to remain moderate during the summer of 2017, but firm buyer support is expected during the spring months in ethanol markets, allowing for strong demand as plant capacity remains steady based on expected relatively stable corn market prices.

Gasoline Prices (By Region)
West Coast $1.7698 $2.1480
Midwest $1.6805 $1.8873
East Coast $1.5498 $1.4904
Front Month Futures Price (RBOB) $1.6792
Ethanol Prices (By Region)
West Coast $1.6800 $1.7698
Midwest $1.5450 $1.6805
East Coast $1.6450 $1.5498
Front Month Futures Price (AC) $1.5770