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Estimating Willingness to Pay for E85 in the United States Using an Intercept Survey of Flex Motorists

Author

Listed:
  • Sébastien Pouliot
  • Kenneth A Liao
  • Bruce A Babcock

Abstract

Compliance with the Renewable Fuel Standard (RFS) in the United States will require price incentives for a substantial number of motorists with flex-fuel vehicles to switch to high ethanol-gasoline blends. Existing estimates of motorists’ willingness to pay for high-ethanol blends use data from Brazil, data generated when prices greatly favored low-ethanol blends, or stated preference data collected from mail and online surveys. We conducted an intercept survey of flex motorists as they refueled in five U.S. states. We overcome the problem caused by sample prices favoring low-ethanol blends by augmenting revealed preference data with stated preference data. A sample-selection problem arises because motorists with high willingness to pay seek out the relatively few stations that sell high-ethanol blends. We use responses from two questions to inform sample selection. We find the average U.S. motorist requires a substantial discount to switch to high ethanol blends beyond the price that equates the cost per mile of driving.

Suggested Citation

  • Sébastien Pouliot & Kenneth A Liao & Bruce A Babcock, 2018. "Estimating Willingness to Pay for E85 in the United States Using an Intercept Survey of Flex Motorists," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1486-1509.
    • Handle: RePEc:oup:ajagec:v:100:y:2018:i:5:p:1486-1509.
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    File URL: http://hdl.handle.net/10.1093/ajae/aay041
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    Cited by:

    1. Luo, Jinjing & Moschini, GianCarlo, 2019. "Pass-through of the policy-induced E85 subsidy: Insights from Hotelling's model," Energy Economics, Elsevier, vol. 84(C).
    2. Gabriel E. Lade, 2019. "E15 Demand and Small Refinery Waivers: A Battle over Long-Run Market Share," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-5, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Tokgoz, Simla & Traoré, Fousseini, 2023. "Understanding E10 markets in the U.S.: Evidence from spatial data," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1267-1281.
    4. GianCarlo Moschini & Harvey Lapan & Hyunseok Kim, 2017. "The Renewable Fuel Standard in Competitive Equilibrium: Market and Welfare Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(5), pages 1117-1142.
    5. Chad Hart & Lee L. Schulz, 2019. "Production Projections and Trade Adjustments," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-2, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    6. Miguel Carriquiry & Amani Elobeid & Dermot J. Hayes & Wendong Zhang, 2019. "Impact of African Swine Fever on US and World Commodity Markets," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-4, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    7. Gabriel E. Lade, 2018. "Testimony Before the U.S. House Committee on Energy and Commerce Subcommittee on Environment," Center for Agricultural and Rural Development (CARD) Publications 18-pb24, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    8. John M. Crespi & Chen-Ti Chen, 2019. "Global Competition Made 2018 a Bad Time to Start a Trade War," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-1, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    9. Chris Jones & Philip W. Gassman & Keith E. Schilling, 2019. "The Urgent Need to Address Nutrient Imbalance Problems in Iowa's High-Density Livestock Regions," Center for Agricultural and Rural Development (CARD) Publications apr-fall-2019-3, Center for Agricultural and Rural Development (CARD) at Iowa State University.

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