States Producing Domestic Fuel had Less Recession

John Davis

Parts of the U.S. that had a healthy energy producing sector, including the biofuels ethanol and biodiesel, took less of a hit during the recession or even avoided the economic downturn altogether.

A new report from Biofuels Digest details how areas that were able to produce enough energy to meet internal gasoline demands grew their economies at 2.5 times the national average. That allowed those states to have a jump in their gross domestic product (GDP) five times higher than those states that were less than 20 percent energy independent:

The report, which looks at both ethanol and crude oil production as a source for E10 gasoline, compared energy production and state GDP growth for 2007-08. Only coal-rich West Virginia sustained an annual GDP growth rate above 2 percent while providing less than 40 percent of its own gasoline through in-state production. North Dakota, which averaged 6 times as much fuel production as consumption, recorded growth rates over seven percent.

Some of this impact comes from the rising prices of fuel itself, but Alaska, which generates nearly half its GDP from fuel, experienced a GDP drop of 2 percent in 2007-08.

Who went into recession, who avoided?

As the Digest discovered in its investigation, the patchwork of states that were doing well and those that were in trouble – as the country began to fall into recession in 2008 – didn’t make sense, by traditional measures.

In the Midwest, Missouri badly trailed states like North and South Dakota, yet every state on the plains stayed out of recession while Michigan and Ohio tumbled in. In the Southeast, traditional growth engines Georgia and Florida went into early recessions, yet Mississippi and Arkansas were still growing. Why was Wyoming soaring while Idaho was flat?

From a statistical point of view, the key was the level of domestic energy production…

The articles goes on to say that communities that were able to keep their energy dollars at home, in part, through the development of biofuels, were also able to enrich their biotechnology, life sciences and bioenergy industries, which led to more educated people staying in those areas because there were good jobs to be had.

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