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Modeling Biofuels Expansion in a Changing Global Environment

Author

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  • Peters, May
  • Somwaru, Agapi
  • Hansen, James M.
  • Seeley, Ralph
  • Dirkse, Steve

Abstract

This paper examines the impact of declining energy prices on biofuels production and use and its implications to agricultural commodity markets. It uses PEATSim, a dynamic partial equilibrium, multi-commodity, multi-country global trade model of the agriculture sector to analyze the interaction between biofuel, crop and livestock sectors. The ability of countries to achieve their energy goals will be affected by future direction of petroleum prices. A 50 percent decline in petroleum prices (absent of mandates) would result in rapid decline in biofuel use worldwide accompanied by a decline in feedstock and biofuel prices. About a 21 percent decline in U.S. cost of ethanol production is needed to make ethanol competitive with gasoline and to offset the effect of lower energy prices.

Suggested Citation

  • Peters, May & Somwaru, Agapi & Hansen, James M. & Seeley, Ralph & Dirkse, Steve, 2009. "Modeling Biofuels Expansion in a Changing Global Environment," 2009 Conference, August 16-22, 2009, Beijing, China 51732, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51732
    DOI: 10.22004/ag.econ.51732
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    References listed on IDEAS

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    1. Amani Elobeid & Simla Tokgoz, 2008. "Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 918-932.
    2. Mindy L. Baker & Dermot J. Hayes & Bruce A. Babcock, 2008. "Crop-Based Biofuel Production under Acreage Constraints and Uncertainty," Center for Agricultural and Rural Development (CARD) Publications 08-wp460, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Schmitz Andrew & Moss Charles B. & Schmitz Troy G., 2007. "Ethanol: No Free Lunch," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-28, December.
    4. Tokgoz, Simla & Elobeid, Amani E. & Fabiosa, Jacinto F. & Hayes, Dermot J. & Babcock, Bruce A. & Yu, Tun-Hsiang (Edward) & Dong, Fengxia & Hart, Chad E. & Beghin, John C., 2007. "Long-Term and Global Tradeoffs between Bio-Energy, Feed, and Food," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9811, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Koizumi, Tatsuji & Yanagishima, Koji, 2005. "Impacts of the Brazilian Ethanol Program on the World Ethanol and Sugar Market: An Econometric Simulation Approach," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 7, pages 1-17.
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    Cited by:

    1. Miranda, Silvia Helena Galvao de & Blandford, David & Abler, David G., 2011. "Brazilian biofuels policies and impacts on world agricultural trade," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104534, Agricultural and Applied Economics Association.
    2. Miljkovic, Dragan & Shaik, Saleem & Braun, Dane, 2012. "Impact of biofuel policies on livestock production in the United States," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 817-831.
    3. Vicente E. Montano & Rosalia T. Gabronino & Restie E. Torres, 2019. "The curious relationship between agricultural and energy price index: A Vector Error Correction Model (VECM) analysis approach," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 5(3), pages 161-177.
    4. Somwaru, Agapi & Dirkse, Steve, 2012. "Dynamic PEATSim Model: Documenting Its Use in Analyzing Global Commodity Markets," Technical Bulletins 129359, United States Department of Agriculture, Economic Research Service.
    5. Somwaru, Agapi & Dirkse, Steve, 2012. "Dynamic PEATSim Model: Documenting Its Use in Analyzing Global Commodity Markets," Technical Bulletins 129359, United States Department of Agriculture, Economic Research Service.

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