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Demand Behavior and Commodity Price Volatility Under Evolving Biofuel Markets and Policies

In: Handbook of Bioenergy Economics and Policy

Author

Listed:
  • Seth Meyer

    (Food and Agricultural Policy Research Institute (FAPRI), University of Missouri)

  • Wyatt Thompson

    (Food and Agricultural Policy Research Institute (FAPRI), University of Missouri)

Abstract

Rising petroleum prices, growing incomes in developing nations, and changes in energy policy around the world are having a significant effect on agricultural markets as biofuels begin to play a more substantial role in meeting the world’s energy needs. Some see biofuels as a means to reduce carbon emissions, increase energy independence, and raise farm income. Others note that the new demand for commodities to produce biofuels can lead to higher food prices, potentially undermining food security, and bring about unintended environmental consequences from expanding crop acreage that may result in greater carbon emissions. While there are a large number of studies that examine the influence of biofuels and biofuel policy on the prices of agricultural commodities, one poorly understood impact of greater biofuel production is how these changes have affected commodity price volatility. Price volatility is important for food security, farm income, policy formation, and investment behavior. We examine how greater biofuel production, whether motivated by policy or market prices, might change commodity price volatility in the future.

Suggested Citation

  • Seth Meyer & Wyatt Thompson, 2010. "Demand Behavior and Commodity Price Volatility Under Evolving Biofuel Markets and Policies," Natural Resource Management and Policy, in: Madhu Khanna & Jürgen Scheffran & David Zilberman (ed.), Handbook of Bioenergy Economics and Policy, chapter 0, pages 133-148, Springer.
    • Handle: RePEc:spr:nrmchp:978-1-4419-0369-3_9
    DOI: 10.1007/978-1-4419-0369-3_9
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    Citations

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    Cited by:

    1. Youzhu Li & Jingbo Xia & Chongguang Li & Mingyang Zheng, 2015. "Construction of an Early-Warning System for Vegetable Prices Based on Index Contribution Analysis," Sustainability, MDPI, vol. 7(4), pages 1-15, March.
    2. McPhail, Lihong Lu & Babcock, Bruce A., 2012. "Impact of US biofuel policy on US corn and gasoline price variability," Energy, Elsevier, vol. 37(1), pages 505-513.
    3. Gardebroek, Cornelis & Hernandez, Manuel A., 2013. "Do energy prices stimulate food price volatility? Examining volatility transmission between US oil, ethanol and corn markets," Energy Economics, Elsevier, vol. 40(C), pages 119-129.
    4. Vitezslav Pisa & Jan Bruha & Vitezslav Pisa, 2011. "Dynamics of the Commodity Prices and Quantities: An Analysis using a Dynamic Multiregional CGE Model," EcoMod2011 2889, EcoMod.
    5. F. Benedetto & L. Mastroeni & P. Vellucci, 2021. "Modeling the flow of information between financial time-series by an entropy-based approach," Annals of Operations Research, Springer, vol. 299(1), pages 1235-1252, April.

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