The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity
The rapid growth of US ethanol production, driven by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, has raised questions about intensifying price linkages between energy and food markets. This is based on the premise that higher crude oil prices incentivize ethan...
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| Language: | English |
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Elsevier
2025-01-01
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| Series: | Energy Strategy Reviews |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2211467X2400316X |
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| author | Jin Guo Tetsuji Tanaka Xiufang Wang |
| author_facet | Jin Guo Tetsuji Tanaka Xiufang Wang |
| author_sort | Jin Guo |
| collection | DOAJ |
| description | The rapid growth of US ethanol production, driven by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, has raised questions about intensifying price linkages between energy and food markets. This is based on the premise that higher crude oil prices incentivize ethanol producers to increase production, thereby boosting corn demand. This study explores the impact of biofuel policies by testing the hypothesis that increased U.S. ethanol production has strengthened these linkages. Previous literature overlooked the fact that both fuel and food goods tend to move together with the commodity price index, which can often change in response to interest rates, monetary supply, or the U.S. dollar index. To overcome this deficiency, we filter out the 'noises' from the commodity price index by controlling for the index with the partial wavelet transform and present more accurate relationships between crude oil and corn prices. Our primary finding reveals significant mid- and long-term correlations between crude oil and corn prices from 2007. This suggests that U.S. biofuel policies could strengthen the connectivity between crude oil and corn prices. |
| format | Article |
| id | doaj-art-0ec1c7c8b0f7410eb1793088bc224739 |
| institution | Kabale University |
| issn | 2211-467X |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Energy Strategy Reviews |
| spelling | doaj-art-0ec1c7c8b0f7410eb1793088bc2247392024-12-19T10:53:49ZengElsevierEnergy Strategy Reviews2211-467X2025-01-0157101607The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivityJin Guo0Tetsuji Tanaka1Xiufang Wang2Department of Economics, Setsunan University, 17-8 Ikedanakamachi, Neyagawa, 572-8508, Osaka, Japan; Corresponding author.Department of Economics, Meiji Gakuin University, 1-2-37 Shirokanedai, Minato, 108-8636, JapanOsaka Metropolitan University, 1-1 Gakuen-cho, Nakaku, Sakai, 599-8531, Osaka, JapanThe rapid growth of US ethanol production, driven by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, has raised questions about intensifying price linkages between energy and food markets. This is based on the premise that higher crude oil prices incentivize ethanol producers to increase production, thereby boosting corn demand. This study explores the impact of biofuel policies by testing the hypothesis that increased U.S. ethanol production has strengthened these linkages. Previous literature overlooked the fact that both fuel and food goods tend to move together with the commodity price index, which can often change in response to interest rates, monetary supply, or the U.S. dollar index. To overcome this deficiency, we filter out the 'noises' from the commodity price index by controlling for the index with the partial wavelet transform and present more accurate relationships between crude oil and corn prices. Our primary finding reveals significant mid- and long-term correlations between crude oil and corn prices from 2007. This suggests that U.S. biofuel policies could strengthen the connectivity between crude oil and corn prices.http://www.sciencedirect.com/science/article/pii/S2211467X2400316XCrude oilCornBiofuel policyWavelet |
| spellingShingle | Jin Guo Tetsuji Tanaka Xiufang Wang The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity Energy Strategy Reviews Crude oil Corn Biofuel policy Wavelet |
| title | The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity |
| title_full | The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity |
| title_fullStr | The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity |
| title_full_unstemmed | The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity |
| title_short | The energy-food nexus: Exploring the effects of biofuel policy on crude oil and corn market connectivity |
| title_sort | energy food nexus exploring the effects of biofuel policy on crude oil and corn market connectivity |
| topic | Crude oil Corn Biofuel policy Wavelet |
| url | http://www.sciencedirect.com/science/article/pii/S2211467X2400316X |
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