IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

How does increased corn-ethanol production affect US natural gas prices?

  • Whistance, Jarrett
  • Thompson, Wyatt
Registered author(s):

    In recent years, there has been a push to increase biofuel production in the United States. The biofuel of choice, so far, has been ethanol produced from corn. The effects of increased corn-ethanol production on the consumer prices of food and energy continue to be studied and debated. This study examines, in particular, the effects of increased corn-ethanol production on US natural gas prices. A structural model of the natural gas market is developed and estimated using two stage least squares. A baseline projection for the period 2007-2018 is determined, and two scenarios are simulated. In the first scenario, current biofuel policies including EISA mandates, tariffs, and tax credits are removed. In the second scenario, we hold ethanol production to the level required only for largely obligatory additive use. The results indicate that the increased level of corn-ethanol production occurring as a result of the current US biofuel policies may lead to natural gas prices that are as much as 0.25% higher, on average, than if no biofuel policies were in place. A similar comparison between the baseline and second scenario indicates natural gas prices could be as much as 0.5% higher, on average, for the same period.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 38 (2010)
    Issue (Month): 5 (May)
    Pages: 2315-2325

    in new window

    Handle: RePEc:eee:enepol:v:38:y:2010:i:5:p:2315-2325
    Contact details of provider: Web page:

    References listed on IDEAS
    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.:

    as in new window
    1. Du, Xiaodong & Hayes, Dermot J., 2009. "The impact of ethanol production on US and regional gasoline markets," Energy Policy, Elsevier, vol. 37(8), pages 3227-3234, August.
    2. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
    3. Jones, M. R., 1989. "Analysis of the use of energy in agriculture--Approaches and problems," Agricultural Systems, Elsevier, vol. 29(4), pages 339-355.
    4. Ahmed Mazighi, 2003. "An Examination of the International Natural Gas Trade," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 27(4), pages 313-329, December.
    5. Simla Tokgoz & Amani Elobeid & Jacinto F. Fabiosa & Dermot J. Hayes & Bruce A. Babcock & Tun-Hsiang (Edward) Yu & Fengxia Dong & Chad E. Hart & John C. Beghin, 2007. "Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets," Food and Agricultural Policy Research Institute (FAPRI) Publications 07-sr101, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    6. Wallace E. Tyner & Farzad Taheripour, 2008. "Policy Options for Integrated Energy and Agricultural Markets ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 387-396.
    7. Thompson, Wyatt & Meyer, Seth & Westhoff, Pat, 2009. "How does petroleum price and corn yield volatility affect ethanol markets with and without an ethanol use mandate?," Energy Policy, Elsevier, vol. 37(2), pages 745-749, February.
    8. Uri, Noel D. & Gill, Mohinder, 1992. "Agricultural demands for natural gas and liquefied petroleum gas in the USA," Applied Energy, Elsevier, vol. 41(3), pages 223-241.
    9. Huntington, Hillard G., 2007. "Industrial natural gas consumption in the United States: An empirical model for evaluating future trends," Energy Economics, Elsevier, vol. 29(4), pages 743-759, July.
    10. Szklo, Alexandre & Schaeffer, Roberto & Delgado, Fernanda, 2007. "Can one say ethanol is a real threat to gasoline?," Energy Policy, Elsevier, vol. 35(11), pages 5411-5421, November.
    11. Perrin, Richard K. & Fretes, Nickolas F. & Sesmero, Juan Pablo, 2009. "Efficiency in Midwest US corn ethanol plants: A plant survey," Energy Policy, Elsevier, vol. 37(4), pages 1309-1316, April.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:5:p:2315-2325. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.