Energy security role of biofuels in evolving liquid fuel markets
Abstract
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 mostmore »
- Authors:
-
[1];
[1];
- Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
- National Renewable Energy Lab. (NREL), Golden, CO (United States). Strategic Energy Analysis Center
- Publication Date:
- Research Org.:
- Oak Ridge National Laboratory (ORNL), Oak Ridge, TN (United States)
- Sponsoring Org.:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE), Transportation Office. Bioenergy Technologies Office; USDOE
- OSTI Identifier:
- 1784226
- Alternate Identifier(s):
- OSTI ID: 1437202
- Grant/Contract Number:
- AC05-00OR22725; DE‐AC05‐00OR22725
- Resource Type:
- Accepted Manuscript
- Journal Name:
- Biofuels, Bioproducts & Biorefining
- Additional Journal Information:
- Journal Volume: 12; Journal Issue: 5; 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
Uria Martinez, Rocio, Leiby, Paul Newsome, and Brown, Maxwell L. Energy security role of biofuels in evolving liquid fuel markets. United States: N. p., 2018.
Web. doi:10.1002/bbb.1891.
Uria Martinez, Rocio, Leiby, Paul Newsome, & Brown, Maxwell L. Energy security role of biofuels in evolving liquid fuel markets. United States. https://doi.org/10.1002/bbb.1891
Uria Martinez, Rocio, Leiby, Paul Newsome, and Brown, Maxwell L. Tue .
"Energy security role of biofuels in evolving liquid fuel markets". United States. https://doi.org/10.1002/bbb.1891. https://www.osti.gov/servlets/purl/1784226.
@article{osti_1784226,
title = {Energy security role of biofuels in evolving liquid fuel markets},
author = {Uria Martinez, Rocio and Leiby, Paul Newsome and Brown, Maxwell L.},
abstractNote = {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 cases evaluated here, sudden oil‐price increases remain costly. © 2018 Society of Chemical Industry and John Wiley & Sons, Ltd},
doi = {10.1002/bbb.1891},
journal = {Biofuels, Bioproducts & Biorefining},
number = 5,
volume = 12,
place = {United States},
year = {Tue May 15 00:00:00 EDT 2018},
month = {Tue May 15 00:00:00 EDT 2018}
}
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