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Using The Crude Oil And Heating Oil Markets For Diesel Fuel Purchasing Decisions

Author

Listed:
  • Dhuyvetter, Kevin C.
  • Dean, Erik
  • Parcell, Joseph L.

Abstract

Agricultural producers and input suppliers must regularly make decisions based on forecasts; however, most publicly available forecasts are for outputs. Research has shown the importance of being a low-cost operator. Thus, focusing on inputs may be beneficial. The objective of this research was to estimate models based on futures markets to forecast diesel fuel prices. Results suggest diesel fuel prices forecasted using the crude oil or heating oil futures market are reasonably accurate, and that this approach is superior to using a historical average. Based on out-of-sample price predictions, producers could profitably use crude oil futures-based models to make diesel fuel purchasing decisions. While the gains from following a model-based decision rule were small, they were positive, suggesting producers would not be worse off following this strategy.

Suggested Citation

  • Dhuyvetter, Kevin C. & Dean, Erik & Parcell, Joseph L., 2003. "Using The Crude Oil And Heating Oil Markets For Diesel Fuel Purchasing Decisions," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 21(2).
  • Handle: RePEc:ags:jloagb:14664
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    References listed on IDEAS

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    1. John A. Fox & Jason F. Shogren & Dermot J. Hayes & James B. Kliebenstein, 1998. "CVM-X: Calibrating Contingent Values with Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 455-465.
    2. Lusk, Jayson L. & Fox, John A., 2002. "Consumer Demand For Mandatory Labeling Of Beef From Cattle Administered Growth Hormones Or Fed Genetically Modified Corn," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(01), April.
    3. Jayson L. Lusk & Jutta Roosen & John A. Fox, 2003. "Demand for Beef from Cattle Administered Growth Hormones or Fed Genetically Modified Corn: A Comparison of Consumers in France, Germany, the United Kingdom, and the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 16-29.
    4. Boland, Michael & Schroeder, Ted, 2002. "Marginal Value of Quality Attributes for Natural and Organic Beef," Journal of Agricultural and Applied Economics, Cambridge University Press, pages 39-49.
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