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Economic Parameters for Corn Ethanol and Biodiesel Production

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  • Eidman, Vernon R.

Abstract

This article presents current investment and operating costs of ethanol and biodiesel plants for alternative prices of feedstock. The price of these two fuels is estimated for alternative prices of crude oil with the existing renewable fuels policy. The excise tax credit, currently $0.51 per gallon of ethanol and $1.00 per gallon of biodiesel, is a major contributor to the fuel price and profitability of these industries. The analysis demonstrates how the crude oil price, feedstock price, and excise tax credits interact to impact profitability of these industries

Suggested Citation

  • Eidman, Vernon R., 2007. "Economic Parameters for Corn Ethanol and Biodiesel Production," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 39(2), pages 1-12, August.
    • Handle: RePEc:ags:joaaec:6519
    DOI: 10.22004/ag.econ.6519
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    1. Tiffany, Douglas G. & Eidman, Vernon R., 2003. "Factors Associated With Success Of Fuel Ethanol Producers," Staff Papers 14155, University of Minnesota, Department of Applied Economics.
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    Cited by:

    1. Moschini, GianCarlo & Lapan, Harvey & Kim, Hyunseok, 2016. "The Renewable Fuel Standard: Market and Welfare Effects of Alternative Policy Scenarios," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235721, Agricultural and Applied Economics Association.
    2. Dahlgran, Roger A., 2009. "Inventory and Transformation Hedging Effectiveness in Corn Crushing," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-18, April.
    3. Spaulding, Aslihan D. & Schmidgall, Timothy J., 2008. "Examination of Ethanol Marketing and Input Procurement Practices of the U.S. Ethanol Producers," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6457, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Drabik, Dušan & de Gorter, Harry, 2013. "Emissions from Indirect Land Use Change: Do they Matter with Fuel Market Leakages?," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 16(2), pages 1-13, September.
    5. Lapan, Harvey & Moschini, GianCarlo, 2012. "Second-best biofuel policies and the welfare effects of quantity mandates and subsidies," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 224-241.
    6. Henderson, Jason R. & Gloy, Brent A., 2008. "The Impact of Ethanol Plants on Land Values in the Great Plains," 2007 Agricultural and Rural Finance Markets in Transition, October 4-5, 2007, St. Louis, Missouri 48148, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    7. David Ubilava, 2012. "Modeling Nonlinearities in the U.S. Soybean‐to‐Corn Price Ratio: A Smooth Transition Autoregression Approach," Agribusiness, John Wiley & Sons, Ltd., vol. 28(1), pages 29-41, January.
    8. Gardner Bruce, 2007. "Fuel Ethanol Subsidies and Farm Price Support," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-22, December.
    9. Sparks, G.D. & Ortmann, Gerald F. & Lagrange, L., 2010. "An Economic Evaluation of Soybean-Based Biodiesel Production on Commercial Farms in the Soybean-Producing Regions of KwaZulu-Natal: Some Preliminary Results," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95980, African Association of Agricultural Economists (AAAE).
    10. repec:ags:ijag24:347272 is not listed on IDEAS
    11. Sparks, G.D. & Ortmann, G.F., 2011. "Global biofuel policies: A review," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 50(2), September.
    12. Zhu, Yichen & Ghoshray, Atanu, 2021. "Climate Anomalies and Its Impact on U.S. Corn and Soybean Prices," 2021 Conference, August 17-31, 2021, Virtual 315271, International Association of Agricultural Economists.
    13. repec:lic:licosd:35114 is not listed on IDEAS
    14. Sparks, G.D. & Ortmann, G.F. & Lagrange, L., 2011. "An Economic Evaluation of Soybean-Based Biodiesel Production on Commercial Farms in Kwazulu-Natal, South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 50(3), September.
    15. Miller, Jesse & Clark, Christopher M. & Peterson, Steve & Newes, Emily, 2024. "Estimated attribution of the RFS program on soybean biodiesel in the U.S. using the bioenergy scenario model," Energy Policy, Elsevier, vol. 192(C).
    16. Drabik, Dušan & Ciaian, Pavel & Pokrivčák, Ján, 2016. "The effect of ethanol policies on the vertical price transmission in corn and food markets," Energy Economics, Elsevier, vol. 55(C), pages 189-199.
    17. Drabik, Dusan, 2011. "The Theory of Biofuel Policy and Food Grain Prices," Working Papers 126615, Cornell University, Department of Applied Economics and Management.
    18. Funk, Samuel M. & Zook, James E. & Featherstone, Allen M., 2008. "Chicago Board of Trade Ethanol Contract Efficiency," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6811, Southern Agricultural Economics Association.
    19. Brent A. Gloy & Jason Henderson, 2008. "The impact of ethanol plants on cropland values in the Great Plains," Regional Research Working Paper RRWP 08-01, Federal Reserve Bank of Kansas City.
    20. Henderson, Jason R. & Gloy, Brent A., 2008. "The Impact of Ethanol Plants on Cropland Values in the Great Plains," Working Papers 51080, Cornell University, Department of Applied Economics and Management.
    21. repec:ags:ijag24:347278 is not listed on IDEAS
    22. Cai, Xiaowei & Stiegert, Kyle W., 2014. "Market Analysis of Ethanol Capacity," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(1), pages 1-12, February.

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    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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