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The effect of biofuel policies on feedstock market: Empirical evidence for rapeseed oil prices in EU

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  • Peri, Massimo
  • Baldi, Lucia

Abstract

The growing expansion of biofuel production in the European Union is a direct consequence of the political framework specifically implemented to reduce the impact of oil price rises and to achieve fuel security and environmental goals. These policies have activated a new relationship between fossil fuel and vegetable oil prices. Combining a multiple structural change approach with rolling cointegration, the article identifies four structural breaks in the relationships between the price of mineral and vegetable oils. Results show that policy instruments are responsible for these structural changes in the long-run relationships between prices. The analysis also shows that from the implementation of the directive 2003/30/EC the price dynamic of rapeseed oil has shifted from its own market to the diesel market, making it subject to interactions with the more complex reality of mineral oil.

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  • Peri, Massimo & Baldi, Lucia, 2013. "The effect of biofuel policies on feedstock market: Empirical evidence for rapeseed oil prices in EU," Resource and Energy Economics, Elsevier, vol. 35(1), pages 18-37.
    • Handle: RePEc:eee:resene:v:35:y:2013:i:1:p:18-37
    DOI: 10.1016/j.reseneeco.2012.11.002
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    More about this item

    Keywords

    Rapeseed oil market; Biofuel policy; Diesel price; Multiple structural changes; Rolling cointegration;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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