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The Economic Effects of COVID-19 on the Producers of Ethanol, Corn, Gasoline, and Oil

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  • Schmitz Andrew

    (University of Florida, Gainesville, USA)

  • Moss Charles B.

    (University of Florida, Gainesville, USA)

  • Schmitz Troy G.

    (Arizona State University, Mesa, USA)

Abstract

The COVID-19 crisis created large economic losses for corn, ethanol, gasoline, and oil producers and refineries both in the United States and worldwide. We extend the theory used by Schmitz, A., C. B. Moss, and T. G. Schmitz. 2007. “Ethanol: No Free Lunch.” Journal of Agricultural & Food Industrial Organization 5 (2): 1–28 as a basis for empirical estimation of the effect of COVID-19. We estimate, within a welfare economic cost-benefit framework that, at a minimum, the producer cost in the United States for these four sectors totals $176.8 billion for 2020. For U.S. oil producers alone, the cost was $151 billion. When world oil is added, the costs are much higher, at $1055.8 billion. The total oil producer cost is $1.03 trillion, which is roughly 40 times the effect on U.S. corn, ethanol, and gasoline producers, and refineries. If the assumed unemployment effects from COVID-19 are taken into account, the total effect, including both producers and unemployed workers, is $212.2 billion, bringing the world total to $1266.9 billion.

Suggested Citation

  • Schmitz Andrew & Moss Charles B. & Schmitz Troy G., 2020. "The Economic Effects of COVID-19 on the Producers of Ethanol, Corn, Gasoline, and Oil," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 18(2), pages 1-18, November.
    • Handle: RePEc:bpj:bjafio:v:18:y:2020:i:2:p:18:n:10
    DOI: 10.1515/jafio-2020-0025
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    References listed on IDEAS

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    1. Richard E, Just & Darrell L. Heuth & Andrew Schmitz, 2004. "The Welfare Economics of Public Policy," Books, Edward Elgar Publishing, number 3342.
    2. Beghin, John C. & Timalsina, Sushant, 2020. "The Impact of the COVID-19 Crisis on Nebraska's Ethanol Industry," Cornhusker Economics 309739, University of Nebraska-Lincoln, Department of Agricultural Economics.
    3. Dong Hee Suh & Charles B. Moss, 2017. "Decompositions of corn price effects: implications for feed grain demand and livestock supply," Agricultural Economics, International Association of Agricultural Economists, vol. 48(4), pages 491-500, July.
    4. 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.
    5. Chad E. Hart & Dermot J. Hayes & Keri L. Jacobs & Lee L. Schulz & John M. Crespi, 2020. "The Impact of COVID-19 on Iowa's Corn, Soybean, Ethanol, Pork, and Beef Sectors," Center for Agricultural and Rural Development (CARD) Publications 20-pb28, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Gao, Yixuan & Malone, Trey & Schaefer, K. Aleks & Myers, Robert J., 2023. "Disentangling Short-Run COVID-19 Price Impact Pathways in the US Corn Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(2), May.

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