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

Abstract

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 casesmore » evaluated here, sudden oil-price increases remain costly.« less

Authors:
ORCiD logo [1];  [1];  [2]
  1. Environmental Sciences Division, Oak Ridge National Laboratory, Oak Ridge TN USA
  2. Strategic Energy Analysis Center, National Renewable Energy Laboratory, Golden CO USA
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE), Bioenergy Technologies Office (EE-3B)
OSTI Identifier:
1456871
Report Number(s):
NREL/JA-6A20-71798
Journal ID: ISSN 1932-104X
DOE Contract Number:  
AC36-08GO28308
Resource Type:
Journal Article
Journal Name:
Biofuels, Bioproducts & Biorefining
Additional Journal Information:
Journal Volume: none; Journal Issue: none; Journal ID: ISSN 1932-104X
Publisher:
Wiley
Country of Publication:
United States
Language:
English
Subject:
09 BIOMASS FUELS; biofuels; energy security; oil supply shocks

Citation Formats

Uría-Martínez, Rocío, Leiby, Paul N., and Brown, Maxwell L. Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets. United States: N. p., 2018. Web. doi:10.1002/bbb.1891.
Uría-Martínez, Rocío, Leiby, Paul N., & Brown, Maxwell L. Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets. United States. doi:10.1002/bbb.1891.
Uría-Martínez, Rocío, Leiby, Paul N., and Brown, Maxwell L. Tue . "Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets". United States. doi:10.1002/bbb.1891.
@article{osti_1456871,
title = {Energy security role of biofuels in evolving liquid fuel markets: Energy Security Role of Biofuels in Evolving Liquid Fuel Markets},
author = {Uría-Martínez, Rocío and Leiby, Paul N. and Brown, Maxwell L.},
abstractNote = {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.},
doi = {10.1002/bbb.1891},
journal = {Biofuels, Bioproducts & Biorefining},
issn = {1932-104X},
number = none,
volume = none,
place = {United States},
year = {2018},
month = {5}
}