On the economic sustainability of ethanol E85
AbstractSeveral studies have considered the sustainability of corn-based ethanol as produced in the US as a major fuel source from a technical perspective. However, not much attention has been paid to the market-based aspects of corn-based ethanol as a sustainable fuel. We address this question by offering an econometric analysis of the E85 (apparently the most viable of the potential substitutes for gasoline) market using demand and supply analysis. Reduced form price equation estimates indicate that the cross elasticity of E85's price with respect to the price of gasoline does not differ significantly from unity, so that any rise in gasoline prices will be matched (in percentage terms) by a corresponding rise in the price of E85. Thus, given the current market, which includes significant government subsidy, the prospect that E85 will ever be price competitive with gasoline is indeed dim.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 32 (2010)
Issue (Month): 6 (November)
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Web page: http://www.elsevier.com/locate/eneco
Economic sustainability Ethanol E85 Reduced form estimation Energy policy;
Find related papers by JEL classification:
- Eco - Macroeconomics and Monetary Economics - - - - -
- sus - - - - - -
- Eth - Macroeconomics and Monetary Economics - - - - -
- E85 - Macroeconomics and Monetary Economics - - - - -
- Red - Urban, Rural, Regional, Real Estate, and Transportation Economics - - - - -
- for - - - - - -
- est - - - - - -
- Ene - Macroeconomics and Monetary Economics - - - - -
- pol - - - - - -
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tyner, Wallace E. & Quear, Justin, 2006. "Comparison of a Fixed and Variable Corn Ethanol Subsidy," Choices, Agricultural and Applied Economics Association, vol. 21(3).
- George Ford & John Jackson, 1998. "On the interpretation of policy effects from estimates of simultaneous systems of equations," Applied Economics, Taylor and Francis Journals, vol. 30(8), pages 995-999.
- Amani Elobeid & Simla Tokgoz, 2006.
"Removal of U.S. Ethanol Domestic and Trade Distortions: Impact on U.S. and Brazilian Ethanol Markets,"
Food and Agricultural Policy Research Institute (FAPRI) Publications
06-wp427, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Amani Elobeid & Simla Tokgoz, 2006. "Removal of U.S. Ethanol Domestic and Trade Distortions: Impact on U.S. and Brazilian Ethanol Markets," Center for Agricultural and Rural Development (CARD) Publications 06-wp427, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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