Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets

Uría-Martínez, Rocío; Leiby, Paul N.; Brown, Maxwell L.

doi:10.1002/bbb.1891

Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets

Journal Article · Tue May 15 00:00:00 EDT 2018 · Biofuels, Bioproducts & Biorefining

DOI:https://doi.org/10.1002/bbb.1891· OSTI ID:1456871

^[1]; Leiby, Paul N. ^[1]; Brown, Maxwell L. ^[2]

Environmental Sciences Division, Oak Ridge National Laboratory, Oak Ridge TN USA
Strategic Energy Analysis Center, National Renewable Energy Laboratory, Golden CO USA

We explore the role of biofuels in mitigating the negative impacts of oil supply shocks on fuel markets under a range of oil price trajectories and biofuel blending mandate levels. Using a partial equilibrium model of US biofuels production and petroleum fuels trade, we discuss the adjustments in light-duty vehicle fuel mix, fuel prices, and renewable identification number (RIN) prices following each shock as well as the distribution of shock costs across market participants. Ethanol is used as both a complement (blend component in E10) and a substitute (in E15 and E85 blends) to gasoline. Results show that, during oil supply shocks, the role of ethanol as a substitute dominates and allows some mitigation of the shock. As US petroleum imports decrease with growing US oil production, the net economic welfare effect of sudden oil price changes and the energy security role of biofuels becomes less clear than it has been in the past. Although fuel consumers lose when oil price increases due to an external shock, domestic fuel producers gain. In some cases, depending on import share and supply and demand elasticities, we show that the gain to producers could more than offset consumer losses. However, in most cases evaluated here, sudden oil-price increases remain costly.

Research Organization:: National Renewable Energy Laboratory (NREL), Golden, CO (United States)

Sponsoring Organization:: USDOE Office of Energy Efficiency and Renewable Energy (EERE), Bioenergy Technologies Office (EE-3B)

DOE Contract Number:: AC36-08GO28308

OSTI ID:: 1456871

Report Number(s):: NREL/JA-6A20-71798

Journal Information:: Biofuels, Bioproducts & Biorefining, Journal Name: Biofuels, Bioproducts & Biorefining Journal Issue: none Vol. none; ISSN 1932-104X

Publisher:: Wiley

Country of Publication:: United States

Language:: English

References (25)

Supply Flexibility in the Shale Patch: Evidence from North Dakota Bjørnland, Hilde C.; Nordvik, Frode Martin; Rohrer, Maximilian SSRN Electronic Journal https://doi.org/10.2139/ssrn.3434198	journal	January 2019
Supply flexibility in the shale patch: Evidence from North Dakota Bjørnland, Hilde C.; Nordvik, Frode Martin; Rohrer, Maximilian Journal of Applied Econometrics, Vol. 36, Issue 3 https://doi.org/10.1002/jae.2808	journal	March 2021
How does petroleum price and corn yield volatility affect ethanol markets with and without an ethanol use mandate? Thompson, Wyatt; Meyer, Seth; Westhoff, Pat Energy Policy, Vol. 37, Issue 2 https://doi.org/10.1016/j.enpol.2008.08.035	journal	February 2009
U.S. oil dependence 2014: Is energy independence in sight? Greene, David L.; Liu, Changzheng Energy Policy, Vol. 85 https://doi.org/10.1016/j.enpol.2015.05.017	journal	October 2015
Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect Small, Kenneth A.; Van Dender, Kurt The Energy Journal, Vol. 28, Issue 1 https://doi.org/10.5547/ISSN0195-6574-EJ-Vol28-No1-2	journal	January 2007
The Impact of the Shale Oil Revolution on U.S. Oil and Gasoline Prices Kilian, Lutz SSRN Electronic Journal https://doi.org/10.2139/ssrn.2743100	journal	January 2016
The Impact of the Shale Oil Revolution on U.S. Oil and Gasoline Prices Kilian, Lutz SSRN Electronic Journal https://doi.org/10.2139/ssrn.2538422	journal	January 2014
A mixed complementarity model for the US biofuel market with federal policy interventions Christensen, Adam; Siddiqui, Sauleh Biofuels, Bioproducts and Biorefining, Vol. 9, Issue 4 https://doi.org/10.1002/bbb.1545	journal	March 2015
Assessing the U.S. oil security premium Brown, Stephen P. A.; Huntington, Hillard G. Energy Economics, Vol. 38 https://doi.org/10.1016/j.eneco.2013.03.010	journal	July 2013
World Oil: Market or Mayhem? Smith, James L. Journal of Economic Perspectives, Vol. 23, Issue 3 https://doi.org/10.1257/jep.23.3.145	journal	August 2009
The Impact of the Shale Oil Revolution on U.S. Oil and Gasoline Prices Kilian, Lutz Review of Environmental Economics and Policy, Vol. 10, Issue 2 https://doi.org/10.1093/reep/rew001	journal	July 2016
Fuel price impacts and compliance costs associated with the Renewable Fuel Standard (RFS) Christensen, Adam; Siddiqui, Sauleh Energy Policy, Vol. 86 https://doi.org/10.1016/j.enpol.2015.08.002	journal	November 2015
Supply Flexibility in the Shale Patch: Evidence from North Dakota Bjjrnland, Hilde C.; Nordvik, Frode Martin; Rohrer, Maximilian SSRN Electronic Journal https://doi.org/10.2139/ssrn.3003086	journal	January 2017
Oil and the Macroeconomy Hamilton, James D. The New Palgrave Dictionary of Economics https://doi.org/10.1057/978-1-349-95121-5_2119-1	book	January 2008
Cellulosic biorefinery portfolio and diversification: Strategies to mitigate cellulosic biorefinery risks in US Corn Belt Golecha, Rajdeep; Gan, Jianbang Energy Strategy Reviews, Vol. 13-14 https://doi.org/10.1016/j.esr.2016.09.003	journal	November 2016
Risk management consideration in the bioeconomy de Assis, Camilla Abbati; Gonzalez, Ronalds; Kelley, Stephen Biofuels, Bioproducts and Biorefining, Vol. 11, Issue 3 https://doi.org/10.1002/bbb.1765	journal	February 2017
Systematic Monetary Policy and the Effects of Oil Price Shocks Bernanke, Ben S.; Gertler, Mark; Watson, Mark Brookings Papers on Economic Activity, Vol. 1997, Issue 1 https://doi.org/10.2307/2534702	journal	January 1997
Determining energy and climate market policy using multiobjective programs with equilibrium constraints Siddiqui, Sauleh; Christensen, Adam Energy, Vol. 94 https://doi.org/10.1016/j.energy.2015.11.002	journal	January 2016
Oil production responses to price changes: an empirical application of the competitive model to OPEC and non-OPEC countries Ramcharran, Harri Energy Economics, Vol. 24, Issue 2 https://doi.org/10.1016/S0140-9883(01)00091-3	journal	March 2002
Analysis of an imperfectly competitive cellulosic biofuel supply chain Huang, Yongxi; Chen, Yihsu Transportation Research Part E: Logistics and Transportation Review, Vol. 72 https://doi.org/10.1016/j.tre.2014.09.008	journal	December 2014
Impacts of oil price shocks on the United States economy: A meta-analysis of the oil price elasticity of GDP for net oil-importing economies Oladosu, Gbadebo A.; Leiby, Paul N.; Bowman, David C. Energy Policy, Vol. 115 https://doi.org/10.1016/j.enpol.2018.01.032	journal	April 2018
Exogenous Oil Supply Shocks: How Big Are They and How Much Do They Matter for the U.S. Economy? Kilian, Lutz Review of Economics and Statistics, Vol. 90, Issue 2 https://doi.org/10.1162/rest.90.2.216	journal	May 2008
The Economics of a Blend Mandate for Biofuels de Gorter, Harry; Just, David R. American Journal of Agricultural Economics, Vol. 91, Issue 3 https://doi.org/10.1111/j.1467-8276.2009.01275.x	journal	August 2009
International Trade Patterns and Policy for Ethanol in the United States Lee, Hyunok; Sumner, Daniel A. Handbook of Bioenergy Economics and Policy https://doi.org/10.1007/978-1-4419-0369-3_19	book	September 2009
A bottom-up biofuel market equilibrium model for policy analysis Zhang, Leilei; Hu, Guping; Wang, Lizhi Annals of Operations Research, Vol. 236, Issue 1 https://doi.org/10.1007/s10479-013-1497-y	journal	November 2013

Similar Records

Energy security role of biofuels in evolving liquid fuel markets

Journal Article · Tue May 15 00:00:00 EDT 2018 · Biofuels, Bioproducts & Biorefining · OSTI ID:1784226

Cost of Oil and Biomass Supply Shocks under Different Biofuel Supply Chain Configurations

Conference · Sun Apr 01 00:00:00 EDT 2018 · OSTI ID:1435287

Related Subjects

09 BIOMASS FUELS
biofuels
energy security
oil supply shocks

Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets

Citation Formats

References (25)

Similar Records

Related Subjects