The United States Department of Agriculture’s (USDA) Economic Research Service recently published a study on biofuel subsidies, Effects of Increased Biofuels on the U.S. Economy in 2022. The report examines how key components of the U.S. economy would be affected by the United States’ Renewable Fuel Standard, which mandates that 36 billion gallons of biofuel be blended into transportation fuel by 2022.

The authors conclude that if biofuel production advances with cost-reducing technology and petroleum prices continue to rise as projected, greater use of biofuels could provide economy-wide benefits. However, the actual level of benefits (or costs) to the U.S. economy will depend on future oil prices and whether tax credits are retained in 2022. With oil at US$ 80 per barrel and tax credits fully retained, GDP would decrease by US$ 5.8 billion a year, partly because of the forgone revenue from tax credits.

The study is available from the USDA website: http://www.ers.usda.gov/Publications/ERR102/ERR102.pdf