Next Article in Journal
Mesoscale Simulation of Year-to-Year Variation of Wind Power Potential over Southern China
Next Article in Special Issue
A Simple Interpretation of Hubbert’s Model of Resource Exploitation
Previous Article in Journal
Global Assessment of High-Altitude Wind Power
Article Menu

Export Article

Open AccessArticle
Energies 2009, 2(2), 320-339;

Ethanol, Corn, and Soybean Price Relations in a Volatile Vehicle-Fuels Market

Economics, Zhejiang University, Hangzhou 310027, China
Agricultural and Applied Economics, University of Georgia, Athens, GA 30602, USA
Author to whom correspondence should be addressed.
Received: 22 April 2009 / Revised: 22 May 2009 / Accepted: 25 May 2009 / Published: 2 June 2009
(This article belongs to the Special Issue Energy Economics)
Full-Text   |   PDF [306 KB, uploaded 17 March 2015]   |  


The rapid upward shift in ethanol demand has raised concerns about ethanol’s impact on the price level and volatility of agricultural commodities. The popular press attributes much of this volatility in commodity prices to a price bubble in ethanol fuel and recent deflation. Market economics predicts not only a softening of demand to high commodity prices but also a positive supply response. This volatility in ethanol and commodity prices are investigated using cointegration, vector error corrections (VECM), and multivariate generalized autoregressive conditional heteroskedascity (MGARCH) models. In terms of derived demand theory, results support ethanol and oil demands as derived demands from vehicle-fuel production. Gasoline prices directly influence the prices of ethanol and oil. However, of greater significance for the fuel versus food security issue, results support the effect of agricultural commodity prices as market signals which restore commodity markets to their equilibriums after a demand or supply event (shock). Such shocks may in the short-run increase agricultural commodity prices, but decentralized freely operating markets will mitigate the persistence of these shocks. Results indicate in recent years there are no long-run relations among fuel (ethanol, oil and gasoline) prices and agricultural commodity (corn and soybean) prices. View Full-Text
Keywords: agricultural commodities; biofuel; ethanol; food versus fuel agricultural commodities; biofuel; ethanol; food versus fuel

Figure 1

This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

Share & Cite This Article

MDPI and ACS Style

Zhang, Z.; Lohr, L.; Escalante, C.; Wetzstein, M. Ethanol, Corn, and Soybean Price Relations in a Volatile Vehicle-Fuels Market. Energies 2009, 2, 320-339.

Show more citation formats Show less citations formats

Related Articles

Article Metrics

Article Access Statistics



[Return to top]
Energies EISSN 1996-1073 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top