کشش های عرضه و تقاضا در بازار سوخت اتانول ایالات متحده

The market for ethanol has grown from approximately 1.2 billion gallons in 1997 to almost 5 billion gallons in 2006. With the huge increase in ethanol demand in recent years, the growth in derived demand for corn has driven up many food prices. This paper uses monthly data from 1997–2006 to estimate the market supply and demand for ethanol at the national level. The simultaneous determination of the supply and demand curves using two-stage least squares allows for the calculation of supply and demand-side elasticities, which are important results in light of the tremendous growth in this market and recent legislation concerning ethanol.

As oil resources are depleted and the outcry against global warming becomes more intense, the need for a viable alternative fuel to replace gasoline is becoming increasingly dire. As a potential domestic alternative to foreign oil, ethanol fuel has become a hot topic in the economic, political, environmental, and scientific arenas. President Bush has proposed an ambitious goal of replacing 15% of US gasoline use with biofuels, including ethanol and biodiesel, within the next ten years (Los Angeles Times, May 17 2007). Though Congress' 2005 mandate that oil refiners use 7.5 billion gallons of renewable fuels such as ethanol was initially well-received, opposition has increased as the effects of increased ethanol production become clearer and more strongly felt (The Economist, October 11, 2007). Many now feel that ethanol may not be the energy fix that everyone was hoping for, and even some environmentalists now oppose it due to ethanol's need for huge amounts of new corn production that cause erosion and degrade habitats. The ethanol controversy has only been heightened by the Energy Information and Security Act of 2007 that calls for 36 million gallons of yearly renewable fuel production by 2022 (The Economist, October 11, 2007; Chicago Tribune,December 14, 2007). The Renewable Fuels Standard (RFS) portion of the act requires 11.1 billion gallons of renewable fuels production in 2009 and an increase in ethanol production up to a 15 billion gallon annual cap in 2015 (Energy Independence and Security Act of 2007, 110th US Congress). The act also provides credits for cellulosic ethanol, funding for cellulosic ethanol research, and funding for construction of biorefineries and ethanol infrastructure to help meet the RFS. Ethanol is currently used as an octane booster (or oxygenate) in conventional gasoline, as well as a clean-air additive in reformulated gasoline (RFG) (DiPardo, 2002). Ethanol serves as a non-toxic, renewable fuel alternative that can be used to power many vehicles. Ethanol also has the ability to function as a complete substitute to gasoline, or more commonly, as a major fuel component in E85 (85% ethanol). As a liquid biofuel, ethanol is created by fermentation of biomass, which is green plant material usually from corn, soybeans, or sugarcane (Pimentel and Patzek, 2007). In 2007, ethanol only accounted for 3.5% of U.S. fuel consumption, and though any car can use 10% ethanol fuel, only 6 million of this country's 237 million vehicles are compatible with E85 (The Economist, June 2 2007). However, ethanol is becoming increasingly popular as a fuel additive, evidenced by the doubling of U.S. ethanol production between 2000 and 2004 (Fig. 1). Ethanol production rose from 3.9 billion gallons in 2005 to 4.85 billion gallons in 2006 (Energy Information Administration, 2007a, Energy Information Administration, 2007b, Energy Information Administration, 2007c and Energy Information Administration, 2007d). According to the Renewable Fuels Association (2007), though there are already 120 ethanol plants in operation in the U.S., another 76 are being built or expanding. Based on all of the ethanol plant construction throughout the corn belt, production capacity is expected to increase to at least 11 billion gallons by 2011 (Baker and Zahniser, 2007). The increasing demand for ethanol requires the use of a large amount of corn, soybeans, sugarcane, or other crops to feed the large fermentation vats necessary for mass production of ethanol fuel. The need for corn to produce much larger quantities of ethanol has inflated prices from the generally stable price of $2/bushel to more than $4 by early 2007 (Renewable Fuels Association, 2007 and United States Department of Agriculture, 2007). As feed grains such as corn become more expensive, meat and other livestock prices become more expensive to produce. The rising price of corn, which has recently become known as “agflation,” has at least partly caused agricultural prices to increase in the United States in recent years (Finance and Economics, 2007, International Food Policy Research Institute, 2008 and Organization for Economic Cooperation and Development and the Food and Agricultural Organization of the United Nations, 2007). Since corn is used in the production of goods ranging from high-fructose sweeteners to cattle feed, corn prices have a considerable effect on a large portion of food industries. The portion of corn used to produce ethanol is expected to rise from 12% to 23% by 2015 (Runge and Senauer, 2007). Additionally, the rising demand for corn has diverted land from soybean production, leading to price pressure on increasingly popular trans-fat-free cooking oils (The Washington Post, June 15 2007). Beyond the direct impacts, ranchers are having a more difficult time finding grazing lands in the face of steep competition from corn farmers expanding their fields (USA Today, July 25 2007). The great demand for corn derived from ethanol demand is clearly having an effect on the U.S. economy, and many fear that widespread “agflation” will only worsen in the coming years. The recent surge in the demand for fuel ethanol, coupled with the above mentioned legislative mandates and proposals for the use of ethanol, has already begun to have an impact on the U.S. gasoline and agricultural markets. The present situation accentuates the need for an updated and expanded econometric analysis of the ethanol fuel market in order to better understand the likely impact of these mandates and proposed legislation. This paper will study the ethanol fuel market from the perspective of supply and demand. What are the largest determinants of ethanol prices and quantities? A simultaneous system of equations will be estimated in order to derive the demand and supply curves for ethanol. These supply and demand models will utilize monthly ethanol production and real price data from September 1997 through December 2006, while analyzing the effects of gasoline prices, income, corn factor prices, transportation costs, technological innovations, co-product prices, changes in federal subsidy levels, changes in regulatory structure, such as methyl tert-butyl ether (MTBE) restrictions, and MTBE prices. Based on the updated supply and demand models, price elasticities can be calculated to assess the predicted responses of ethanol production to ethanol, gasoline, MTBE, and corn price changes. This analysis will then be used to speculate about future ethanol prices and the feasibility of expanding the use of ethanol as an alternative fuel. By understanding the economic model, discussion about the environmental and political outcomes of increased ethanol production will become more informed. Given current government policy decisions regarding alternative fuels, this model will enhance our ability to understand how ethanol production and demand may change in the coming years.

The demand and supply equations were able to quantitatively capture many of the factors that influence ethanol supply and demand. Based on the coefficients for each of the variables, elasticities were able to be calculated and compared with the previous analysis of ethanol supply and demand performed by Rask (1998). In both the current model and the Rask model, the ethanol supply price response was inelastic. The inelastic response of ethanol production to changes in ethanol price mean that shifts in demand, perhaps due to changes in MTBE bans, will translate primarily into changes in ethanol prices rather than ethanol production, at least in the short run. Legislation that acts to influence demand for ethanol will be seen in prices at the pumps. Another interesting result of the above estimation is that ethanol production was not found to be consistently significantly related to corn prices, and the lone significant result yielded an elasticity of 0.121 (Table 2a, Column (1)). This result comes in sharp contrast to the corn elasticity of − 3.03 calculated from 1988–1993 data in Rask (1998). The disparities in corn price elasticities between the time periods may be due to the unprecedented production increases over the last five years and to the growing ban on the use of MTBE as an oxygenate. It seems that the effect of the increasing levels of ethanol production has dramatically altered the relationship between the ethanol and corn markets. In the past, corn prices could strongly dictate ethanol production. Now, given the current clean air requirements and other government regulations requiring ethanol use, ethanol production now appears to play at least some role in determining the price of corn, as illustrated in the results of Table 2c. This at least partially explains why corn prices, which have been historically stable at around $2/bushel, have been rising to more than $4/bushel in recent months (Fig. 4). This dramatic change in the factor-production relationship of the ethanol market may be behind the rippling effect of rising food prices that are being felt around the world in diverse agricultural and food markets (International Food Policy Research Institute, 2008 and Organization for Economic Cooperation and Development and the Food and Agricultural Organization of the United Nations, 2007). On the demand side, additional interesting conclusions can be drawn. The ethanol price elasticity of demand (− 1.605 to − 2.915) suggests that ethanol prices have a very strong effect on the quantity demanded. This result agrees well with the data from 1984–1987 (− 2.82), but it is very different from the 1988–1993 elasticity of − 0.37. Rask suggests that this temporal disparity may be due to the up-and-down nature of the corn price cycle. Another explanation deals with changes in the availability of substitutes. As the number of substitutes increases, the good becomes more elastic because consumers can find alternatives with ease. In the case of ethanol, however, the main substitute is MTBE. It can be predicted that decreasing levels of MTBE as an oxygenate substitute would lead to more price inelastic demand for ethanol in the future. On the other hand, if increasing quantities of ethanol become used a substitute for gasoline, then ethanol may become more price-elastic in the future. Another important elasticity from the demand equation is the gasoline price elasticity. The gasoline price elasticity calculated in this analysis (− 2.080 to − 3.606) agreed strongly with the value calculated based on the 1988–1993 data (− 2.13). Unlike the ethanol price elasticity, the gasoline price elasticity appears to be quite stable. Regardless of the specification used, the gasoline price coefficient remained very stable and highly significant (Table 2b). Increasing gasoline prices have a strong negative effect on the quantity of ethanol demanded. This makes sense because most ethanol demand is derived from the demand for gasoline enriched with ethanol. The calculated elasticity seems to imply that any ability of ethanol to substitute for gasoline when gasoline prices rise is completely swamped by the decrease in ethanol use as a component of gasoline. Increasing gas prices have not yet led to increased demand for ethanol, which can be seen as evidence that ethanol is not yet a consistently viable and widespread alternative to gasoline. The use of ethanol as a fuel will remain controversial for many years as experts, consumers, and policy-makers continue to debate its economic, environmental, and political feasibility. When state and federal subsidies for corn and ethanol production are added together, the subsidy totals more than $7/bushel of corn or $2.59/per gal of ethanol (Pimentel and Patzek, 2007). Not only can ethanol not compete with gasoline on an unsubsidized gallon-to-gallon price basis, it cannot compete on the basis of energy output per gallon. Ethanol only provides about two-thirds the energy of an equal volume of gasoline, so 1.5 gal of ethanol are necessary to travel the same distance allowed by the use of 1 gal of gasoline (Pimentel and Patzek, 2007); however, growth in ethanol production is expected to continue, so the effects of increased corn demand and higher proportions of ethanol in fuel will only become more pronounced. The Renewable Fuels Standard (RFS) portion of the Energy and Independence Security Act of 2007 requires increasing ethanol production from the 9 billion gallons for 2009 until production reaches the 15 billion gallon annual cap imposed beginning in 2015 (Energy Independence and Security Act of 2007, 110th US. Congress). As the major renewable fuel in use in the U.S., ethanol demand can be expected to keep pace with the government requirements. Based on USDA baseline projections, this continued increase in ethanol demand is expected to cause the share of ethanol in total corn use to rise from the current level of 12% up to 23% in 2016 (Sakr, 2007 and United States Department of Agriculture, 2007). Though ethanol production doubled between 2000 and 2004, it will need to more than double again to reach the predicted 2011 level of 11 billion gallons (Renewable Fuels Association, 2007 and Baker and Zahniser, 2007). This will clearly have an impact on agricultural prices as suggested above. Additionally, as ethanol continues to replace MTBE it is likely to become increasingly own-price inelastic on the supply-side and cross-price (MTBE price) inelastic on the demand-side. Ethanol represents an important and safe fuel additive, as well as a possible alternative to foreign oil. Ethanol production continues to expand at an unprecedented rate with the help of generous government subsidies, restrictions on MTBE, and Congressional mandates for increasing the level of renewable fuel production. Ethanol prices and production have been shown to be strongly influenced by gasoline prices, MTBE prices, co-product prices, and recent state bans on MTBE. In the time since an ethanol supply and demand analysis was last conducted in 1998, many considerable changes in the ethanol market and surrounding institutional framework have also been noted. By bringing past analyses up to date, the results of this work help to inform the various political, environmental, and economic debates surrounding ethanol.