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Understanding the Underlying Fundamentals of Ethanol Markets: Linkages between Energy and Agriculture

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  • Tokgoz, Simla
  • Elobeid, Amani E.

Abstract

This study analyzes the impact of price shocks in three input and output markets critical to ethanol: gasoline, corn, and sugar. We investigate the impact of these shocks on ethanol and related agricultural markets in the United States and Brazil. We find that the composition of a country's vehicle fleet determines the direction of the response of ethanol consumption to changes in the gasoline price. We also find that a change in feedstock costs affects the profitability of ethanol producers and the domestic ethanol price. In Brazil, where two commodities compete for sugarcane, changes in the sugar market affect the competing ethanol market.

Suggested Citation

  • Tokgoz, Simla & Elobeid, Amani E., 2007. "Understanding the Underlying Fundamentals of Ethanol Markets: Linkages between Energy and Agriculture," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9795, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea07:9795
    DOI: 10.22004/ag.econ.9795
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    Cited by:

    1. de Gorter Harry & Just David R, 2008. "The Economics of the U.S. Ethanol Import Tariff with a Blend Mandate and Tax Credit," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(2), pages 1-23, December.
    2. de Gorter, Harry & Just, David R., 2007. "The Economics of U.S. Ethanol Import Tariffs with a Consumption Mandate and Tax Credit," Working Papers 127023, Cornell University, Department of Applied Economics and Management.
    3. Xiaodong Du & Dermot J. Hayes, 2008. "Impact of Ethanol Production on U.S. and Regional Gasoline Prices and on the Profitability of the U.S. Oil Refinery Industry, The," Center for Agricultural and Rural Development (CARD) Publications 08-wp467, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Koizumi, Tatsuji & Ohga, Keiji, 2009. "Impact of the Expansion of Brazilian FFV Utilization and U.S. Biofuel Policy Amendment on the World Sugar and Corn Markets: An Econometric Simulation Approach," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 11, pages 1-24.
    5. Hira, Anil, 2011. "Sugar rush: Prospects for a global ethanol market," Energy Policy, Elsevier, vol. 39(11), pages 6925-6935.
    6. Jose Cantos & Robert Dixon, 2014. "Impacts of bioethanol on gasoline prices in the Philippines: an econometric analysis," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 19(1), pages 1-13, January.

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    Keywords

    Resource /Energy Economics and Policy;

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