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Bottlenecks, Drought, and Oil Price Spikes: Impact on U.S. Ethanol and Agricultural Sectors
Author(s) -
Tokgoz Simla,
Elobeid Amani,
Fabiosa Jacinto,
Hayes Dermot J.,
Babcock Bruce A.,
Yu TunHsiang Edward,
Dong Fengxia,
Hart Chad E.
Publication year - 2008
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/j.1467-9353.2008.00436.x
Subject(s) - agriculture , agricultural economics , oil price , economics , natural resource economics , business , monetary economics , geography , archaeology
We project U.S. ethanol production and its impact on planted acreage, crop prices, livestock production, trade, and retail food costs. The projections are made using a multicommodity, multicountry, partial equilibrium model. Results indicate that expanded U.S. ethanol production will cause long‐run crop prices to increase. In response to higher feed costs, livestock farmgate prices increase enough to cover the feed cost increases. If crude oil prices increase, the U.S. ethanol sector expands. Results of a 1988‐type drought scenario combined with a large mandate for ethanol consumption show higher crop prices, a drop in livestock production, and higher food prices.