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

Tamas Mizik, Lajos Nagy, Zoltán Gabnai and Attila Bai
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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

Energies, 2020, vol. 13, issue 21, 1-22

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.

Keywords: ethanol; oil; price analysis; correlation; COVID (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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