 How does increased corn-ethanol production affect US natural gas prices?Jarrett Whistance and Wyatt Thompson Energy Policy, 2010, vol. 38, issue 5, 2315-2325 Abstract: 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. Keywords: Natural; gas; ethanol; biofuel; policies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:38:y:2010:i:5:p:2315-2325 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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