IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v13y2020i21p5614-d435360.html
   My bibliography  Save this article

The Major Driving Forces of the EU and US Ethanol Markets with Special Attention Paid to the COVID-19 Pandemic

Author

Listed:
  • Tamás Mizik

    (Department of Agribusiness, Institute of Enterprise Development, Corvinus University of Budapest, 1093 Budapest, Hungary)

  • Lajos Nagy

    (Department of Research Methodology and Statistics, Faculty of Economics and Business, University of Debrecen, 4032 Debrecen, Hungary)

  • Zoltán Gabnai

    (Department of Business Economics, Institute of Applied Economics, Faculty of Economics and Business, University of Debrecen, 4032 Debrecen, Hungary)

  • Attila Bai

    (Department of Business Economics, Institute of Applied Economics, Faculty of Economics and Business, University of Debrecen, 4032 Debrecen, Hungary)

Abstract

Ethanol is a widely produced fuel, as well as a fuel additive. Its price is closely related to the price of gasoline, its major substitute. This paper focuses on the impacts of the related variables on regional ethanol prices. Additionally, the length of the price dataset made it possible to isolate the impacts of COVID-19 on the ethanol prices. Using multiple regression and Confirmatory Factor Analyses, we found no significant correlation between the European and US ethanol prices because the major influencing factors were regionally different. In the case of the European ethanol markets, the positive factors were wheat, maize, and potassium chloride prices, while the European sugar and diammonium phosphate prices were negative. In the US markets, gasoline, sugar, and most of the artificial fertilizer prices were positive, while wheat prices were negative. Based on factor analysis, artificial fertilizers and maize factors proved to be important to the European markets, while US ethanol prices were driven by the crude oil-gasoline and raw materials factors. The COVID variable showed no significant connection with the EU prices, but negatively affected the US ethanol prices. This is explained by the different market characteristics, as the US is not only the major consumer, but also the major producer of the different oil products. Therefore, COVID-19 had a double effect on their oil and ethanol markets.

Suggested Citation

  • Tamás Mizik & Lajos Nagy & Zoltán Gabnai & Attila Bai, 2020. "The Major Driving Forces of the EU and US Ethanol Markets with Special Attention Paid to the COVID-19 Pandemic," Energies, MDPI, vol. 13(21), pages 1-22, October.
  • Handle: RePEc:gam:jeners:v:13:y:2020:i:21:p:5614-:d:435360
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/13/21/5614/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/1996-1073/13/21/5614/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Majumder, Monoj Kumar & Raghavan, Mala & Vespignani, Joaquin, 2020. "Oil curse, economic growth and trade openness," Energy Economics, Elsevier, vol. 91(C).
    2. Trujillo-Barrera, Andres & Mallory, Mindy L. & Garcia, Philip, 2012. "Volatility Spillovers in U.S. Crude Oil, Ethanol, and Corn Futures Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), pages 1-16, August.
    3. Tamás Mizik, 2020. "Impacts of International Commodity Trade on Conventional Biofuels Production," Sustainability, MDPI, vol. 12(7), pages 1-20, March.
    4. Zhengyi Dong, 2019. "Does the Development of Bioenergy Exacerbate the Price Increase of Maize?," Sustainability, MDPI, vol. 11(18), pages 1-16, September.
    5. Theodosios Perifanis & Athanasios Dagoumas, 2018. "Price and Volatility Spillovers Between the US Crude Oil and Natural Gas Wholesale Markets," Energies, MDPI, vol. 11(10), pages 1-25, October.
    6. Christian Elleby & Ignacio Pérez Domínguez & Marcel Adenauer & Giampiero Genovese, 2020. "Impacts of the COVID-19 Pandemic on the Global Agricultural Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 1067-1079, August.
    7. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    8. Bahel, Eric & Marrouch, Walid & Gaudet, Gérard, 2013. "The economics of oil, biofuel and food commodities," Resource and Energy Economics, Elsevier, vol. 35(4), pages 599-617.
    9. Richard Barichello, 2020. "The COVID‐19 pandemic: Anticipating its effects on Canada's agricultural trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 219-224, June.
    10. Manochio, C. & Andrade, B.R. & Rodriguez, R.P. & Moraes, B.S., 2017. "Ethanol from biomass: A comparative overview," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 743-755.
    11. Miao, Ruiqing, 2013. "Impact of Ethanol Plants on Local Land Use Change," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(2), pages 1-19, August.
    12. Nazlioglu, Saban & Soytas, Ugur, 2011. "World oil prices and agricultural commodity prices: Evidence from an emerging market," Energy Economics, Elsevier, vol. 33(3), pages 488-496, May.
    13. Alghalith, Moawia, 2010. "The interaction between food prices and oil prices," Energy Economics, Elsevier, vol. 32(6), pages 1520-1522, November.
    14. Guangyong Zhang & Lixin Tian & Wenbin Zhang & Xu Yan & Bingyue Wan & Zaili Zhen, 2020. "A Study on the Similarities and Differences of the Conventional Gasoline Spot Price Fluctuation Network between Different Harbors," Sustainability, MDPI, vol. 12(2), pages 1-25, January.
    15. Ciulla, G. & D'Amico, A., 2019. "Building energy performance forecasting: A multiple linear regression approach," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    16. 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.
    17. Nazlioglu, Saban, 2011. "World oil and agricultural commodity prices: Evidence from nonlinear causality," Energy Policy, Elsevier, vol. 39(5), pages 2935-2943, May.
    18. Esmaeili, Abdoulkarim & Shokoohi, Zainab, 2011. "Assessing the effect of oil price on world food prices: Application of principal component analysis," Energy Policy, Elsevier, vol. 39(2), pages 1022-1025, February.
    19. Qin, Yun & Hong, Kairong & Chen, Jinyu & Zhang, Zitao, 2020. "Asymmetric effects of geopolitical risks on energy returns and volatility under different market conditions," Energy Economics, Elsevier, vol. 90(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Regis, Francesco & Monteverde, Alessandro Hugo Antonio & Fino, Debora, 2023. "A techno-economic assessment of bioethanol production from switchgrass through biomass gasification and syngas fermentation," Energy, Elsevier, vol. 274(C).
    2. Ruiz-López, Estela & Gandara-Loe, Jesús & Baena-Moreno, Francisco & Reina, Tomas Ramirez & Odriozola, José Antonio, 2022. "Electrocatalytic CO2 conversion to C2 products: Catalysts design, market perspectives and techno-economic aspects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    3. Christian Barika Igbeghe & Tamás Mizik & Zoltán Gabnai & Attila Bai, 2023. "Trends and Characterization of Primary Energy Sources by Energy and Food Prices," Energies, MDPI, vol. 16(7), pages 1-18, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cheng, Sheng & Cao, Yan, 2019. "On the relation between global food and crude oil prices: An empirical investigation in a nonlinear framework," Energy Economics, Elsevier, vol. 81(C), pages 422-432.
    2. Riza Radmehr & Shida Rastegari Henneberry, 2020. "Energy Price Policies and Food Prices: Empirical Evidence from Iran," Energies, MDPI, vol. 13(15), pages 1-15, August.
    3. Cheng, Natalie Fang Ling & Hasanov, Akram Shavkatovich & Poon, Wai Ching & Bouri, Elie, 2023. "The US-China trade war and the volatility linkages between energy and agricultural commodities," Energy Economics, Elsevier, vol. 120(C).
    4. Kang, Sang Hoon & Tiwari, Aviral Kumar & Albulescu, Claudiu Tiberiu & Yoon, Seong-Min, 2019. "Exploring the time-frequency connectedness and network among crude oil and agriculture commodities V1," Energy Economics, Elsevier, vol. 84(C).
    5. Balcilar, Mehmet & Gabauer, David & Umar, Zaghum, 2021. "Crude Oil futures contracts and commodity markets: New evidence from a TVP-VAR extended joint connectedness approach," Resources Policy, Elsevier, vol. 73(C).
    6. Korhan K. Gokmenoglu & Hasan Güngör & Festus Victor Bekun, 2021. "Revisiting the linkage between oil and agricultural commodity prices: Panel evidence from an Agrarian state," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5610-5620, October.
    7. Guo, Jin & Tanaka, Tetsuji, 2022. "Do biofuel production and financial speculation in agricultural commodities influence African food prices? New evidence from a TVP-VAR extended joint connectedness approach," Energy Economics, Elsevier, vol. 116(C).
    8. Dervis Kirikkaleli & Ibrahim Darbaz, 2021. "The Causal Linkage between Energy Price and Food Price," Energies, MDPI, vol. 14(14), pages 1-13, July.
    9. Phillip A. Cartwright & Natalija Riabko, 2019. "Do spot food commodity and oil prices predict futures prices?," Review of Quantitative Finance and Accounting, Springer, vol. 53(1), pages 153-194, July.
    10. Serra, Teresa & Zilberman, David, 2013. "Biofuel-related price transmission literature: A review," Energy Economics, Elsevier, vol. 37(C), pages 141-151.
    11. Natanelov, Valeri & McKenzie, Andrew M. & Van Huylenbroeck, Guido, 2013. "Crude oil–corn–ethanol – nexus: A contextual approach," Energy Policy, Elsevier, vol. 63(C), pages 504-513.
    12. Loretta Mastroeni & Alessandro Mazzoccoli & Greta Quaresima & Pierluigi Vellucci, 2021. "Wavelet analysis and energy-based measures for oil-food price relationship as a footprint of financialisation effect," Papers 2104.11891, arXiv.org, revised Mar 2022.
    13. Ahmadi, Maryam & Bashiri Behmiri, Niaz & Manera, Matteo, 2016. "How is volatility in commodity markets linked to oil price shocks?," Energy Economics, Elsevier, vol. 59(C), pages 11-23.
    14. Chen, Peng & He, Limin & Yang, Xuan, 2021. "On interdependence structure of China's commodity market," Resources Policy, Elsevier, vol. 74(C).
    15. Ding Chen & Umar Muhammad Gummi & Shan-Bing Lu & Asiya Mu'azu, 2020. "Modelling the impact of oil price fluctuations on food price in high and low-income oil exporting countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(10), pages 458-468.
    16. Xuan, Poh Paik & Chin, Lee, 2015. "Pass-through Effect of Oil Price into Consumer Price: An Empirical Study," MPRA Paper 96865, University Library of Munich, Germany.
    17. Zhengwei MA & Rui XU & Xiucheng DONG, 2015. "World oil prices and agricultural commodity prices: The evidence from China," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(12), pages 564-576.
    18. Dervis Kirikkaleli & Hasan Güngör, 2021. "Co-movement of commodity price indexes and energy price index: a wavelet coherence approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-18, December.
    19. Sun, Yunpeng & Gao, Pengpeng & Raza, Syed Ali & Shah, Nida & Sharif, Arshian, 2023. "The asymmetric effects of oil price shocks on the world food prices: Fresh evidence from quantile-on-quantile regression approach," Energy, Elsevier, vol. 270(C).
    20. Miroslava Ivanova & Lilko Dospatliev, 2023. "Effects of Diesel Price on Changes in Agricultural Commodity Prices in Bulgaria," Mathematics, MDPI, vol. 11(3), pages 1-22, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:13:y:2020:i:21:p:5614-:d:435360. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.