Commodity Price Volatility in the Biofuel Era: An Examination of the Linkage between Energy and Agricultural Markets
By Thomas W. Hertel, Jayson Beckman. GTAP Working Paper, 2010
151 citations recorded by the source corpus.
Agricultural and energy commodity prices have traditionally exhibited relatively low – even negative correlation. However, the recent increases in biofuel production have altered the agriculture-energy relationship in a fundamental way. The amount of corn utilized for ethanol production in the US has increased from 5% in 2001 to over one-third by the end of the decade. This increase has drawn corn previously sold to other uses (exports, food, feed), as well as acreage devoted to other crops (e.g., oilseeds and other grains). In addition, there has been an increase in the demand for production inputs, especially fertilizers, which are heavily energy-intensive. In short, the previous “biofuel decade” has led to significant changes in the US, and indeed the global economy.
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Citations in the corpus
- Synchronous failure: the emerging causal architecture of global crisis (2015, background): “[7] Because cropland can now grow either food or feedstock for biofuel, human agricultural and energy systems are bidirectionally coupled (Hertel and Beckman 2011, Searchinger and Heimlich 2015).”
- Volatility Spillovers in U.S. Crude Oil, Ethanol, and Corn Futures Markets (2012, background): “Prakash (2011) corroborates this volatility for corn as well as for other agricultural commodities using the implied volatility from options.”
- Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy (2012, background): “These factors make the demand for corn-grain ethanol production more inelastic and may increase the sensitivity of corn prices to supply side shocks, such as those due to weather or disease, by as much as 50 percent (Hertel and Beckman, 2010).”