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Some Long-Run Effects of Growing Markets and Renewable Fuel Standards on Additives Markets and the U.S. Ethanol Industry


  • Gallagher, Paul W.
  • Shapouri, Hosein
  • Price, Jeffrey
  • Schamel, Guenter
  • Brubaker, Heather


The effects of likely regulatory and policy changes in the US gasoline and additives market are compared to a reference baseline. The baseline reflects existing EPA policies about fuel quality regulation and likely petroleum and gasoline expansions. The market and welfare effects are presented for implementing a renewable fuel standard; imposing a national ban on the additive MTBE; and removing the oxygen standard for reformulated fuel. Market and welfare estimates are based on adjusting product market demands and factor supplies. Product market and price analyses include quality-differentiated products, such as refinery gasoline, chemical additives and ethanol at the wholesale level; and gasoline grades in conventional, reformulated and oxygenated markets at the retail level. Factor market analyses include supplies for petroleum, natural gas byproducts, and corn. The analysis includes the welfare cost of fuel to consumers and income in agriculture and the petroleum sector.

Suggested Citation

  • Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some Long-Run Effects of Growing Markets and Renewable Fuel Standards on Additives Markets and the U.S. Ethanol Industry," Staff General Research Papers Archive 10648, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:10648

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    References listed on IDEAS

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    Cited by:

    1. Amani Elobeid & Simla Tokgoz & Dermot J. Hayes & Bruce A. Babcock & Chad E. Hart, 2006. "Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, The," Center for Agricultural and Rural Development (CARD) Publications 06-bp49, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Chen, Xiaoguang & Khanna, Madhu & Onal, Hayri, 2009. "The Economic Potential of Second-Generation Biofuels: Implications for Social Welfare, Land Use and Greenhouse Gas Emissions in Illinois," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49484, Agricultural and Applied Economics Association.
    3. Miljkovic, Dragan & Shaik, Saleem & Braun, Dane, 2012. "Impact of biofuel policies on livestock production in the United States," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 817-831.
    4. Bai, Yun & Ouyang, Yanfeng & Pang, Jong-Shi, 2016. "Enhanced models and improved solution for competitive biofuel supply chain design under land use constraints," European Journal of Operational Research, Elsevier, vol. 249(1), pages 281-297.
    5. Paul Gallagher & Guenter Schamel & Hosein Shapouri & Heather Brubaker, 2006. "The international competitiveness of the U.S. corn-ethanol industry: A comparison with sugar-ethanol processing in Brazil," Agribusiness, John Wiley & Sons, Ltd., vol. 22(1), pages 109-134.
    6. Luchansky, Matthew S. & Monks, James, 2009. "Supply and demand elasticities in the U.S. ethanol fuel market," Energy Economics, Elsevier, vol. 31(3), pages 403-410, May.
    7. Gallagher, Paul W., 2009. "Roles for Evolving Markets, Policies, and Technology Improvements in U.S. Corn Ethanol Industry Development," ISU General Staff Papers 200901010800001495, Iowa State University, Department of Economics.
    8. Gallagher, Paul & Shapouri, Hosein & Brubaker, Heather, 2007. "Scale, Organization, and Profitability of Ethanol Processing," ISU General Staff Papers 200703010800001439, Iowa State University, Department of Economics.
    9. Mazumder, Diya B., 2014. "Biofuel subsidies versus the gas tax: The carrot or the stick?," Energy Economics, Elsevier, vol. 44(C), pages 361-374.
    10. Szulczyk, Kenneth R. & McCarl, Bruce A. & Cornforth, Gerald, 2010. "Market penetration of ethanol," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(1), pages 394-403, January.
    11. Vedenov, Dmitry & Wetzstein, Michael, 2008. "Toward an optimal U.S. ethanol fuel subsidy," Energy Economics, Elsevier, vol. 30(5), pages 2073-2090, September.
    12. Carlo Giupponi & Francesco Bosello & Andrea Povellato, 2007. "A Review of Recent Studies on Cost Effectiveness of GHG Mitigation Measures in the European Agro-Forestry Sector," Working Papers 2007.14, Fondazione Eni Enrico Mattei.
    13. Bai, Yun & Ouyang, Yanfeng & Pang, Jong-Shi, 2012. "Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium," Energy Economics, Elsevier, vol. 34(5), pages 1623-1633.

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