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2 edition of Ethanol, mandates, and drought found in the catalog.

Ethanol, mandates, and drought

Lihong Lu McPhail

Ethanol, mandates, and drought

insights from a stochastic equilibrium model of the U.S. corn market

by Lihong Lu McPhail

  • 326 Want to read
  • 39 Currently reading

Published by Center for Agricultural and Rural Development in Ames, Iowa .
Written in English

    Subjects:
  • Alcohol as fuel -- Economic aspects,
  • Gasohol,
  • Corn -- Prices

  • About the Edition

    The outlook for U.S. corn markets is inextricably linked to what happens to the U.S. ethanol industry, which depends, in turn, on the level of government subsidies and mandates. We develop a stochastic partial equilibrium model to simulate outcomes for the corn market for the 2008/09 marketing year to gain insight into these linkages. The model includes five stochastic variables that are major contributors to corn price volatility: planted acreage, corn yield, export demand, gasoline prices, and capacity of the ethanol industry. Our results indicate that integration of gasoline and corn markets has increased corn price volatility and that the passage of the expanded ethanol mandates in the Energy Independence and Security Act (EISA) has had modest effects on corn prices. Model results indicate an expected average marketing year price of $4.97 per bushel and a price volatility of 17.5% without the 10 billion gallon EISA mandate but with maintenance of the $0.51 per gallon tax credit. Imposition of the mandate increases the expected price by 7.1% and price volatility by 12.1%. The effects of the mandate are modest as ethanol production would average 9.5 billion gallons without the mandate because of high gasoline prices. The mandate is binding with a probability of 37.8%, which indicates that an additional tax or subsidy will be needed to ensure that the mandate is met. High corn prices caused by drought can cause the mandate to bind. Fixing 2008 corn yields at extreme drought levels increases expected corn prices to $6.59 per bushel without a mandate and to $7.99 per bushel with the EISA mandate. An average additional subsidy of $0.73 per gallon of ethanol would be needed to ensure that the mandate is met in this drought scenario. Elimination of the current blenders tax credit would result in the mandate not being met in all cases. On average, a subsidy of $0.41 per gallon would ensure that ethanol production is at least 10 billion gallons in the 2008/09 marketing year.

    Edition Notes

    StatementLihong Lu McPhail and Bruce A. Babcock.
    SeriesWorking paper -- 08-WP 464, Working paper (Iowa State University. Center for Agricultural and Rural Development) -- 08-WP 464.
    ContributionsBabcock, Bruce A., Iowa State University. Center for Agricultural and Rural Development.
    Classifications
    LC ClassificationsHD9502.5.A433 U54497 2008
    The Physical Object
    Pagination24 p. :
    Number of Pages24
    ID Numbers
    Open LibraryOL23961177M
    LC Control Number2008412814

      The governors of Arkansas, North Carolina and several other states want the ethanol mandate suspended amid rising corn prices brought about by this summer’s punishing drought. Governors of corn. As a severe drought shrinks the expected US corn harvest, the market should not take it as a given that the Environmental Protection Agency will lift this year s ethanol mandate, a Bank of America Merrill Lynch analyst said Monday, pointing to ample storage, exports and renewable fuel credits.


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Ethanol, mandates, and drought by Lihong Lu McPhail Download PDF EPUB FB2

Niznik, from Stratas Advisors, says that when corn prices hit a peak inbecause of a drought in the Midwest, there were bitter complaints about the. Because most U.S. ethanol mandates produced from corn, the same variety needed for livestock feed, the corn shortage and price escalation from this summer's drought will Author: Larry Bell.

Gasoline containing up to 10% ethanol began a decades-long growth in the United States in the late s. The demand for ethanol produced from field corn was spurred by the discovery that methyl tertiary butyl ether (MTBE) was contaminating groundwater.

MTBE's use as an oxygenate additive was widespread due to mandates in the And drought book Air Act amendments of to reduce carbon monoxide. A severe drought driving up U.S. food prices is shifting the politics of ethanol, prompting members of both parties to question policies favoring the corn-based alternative fuel that have long.

Downloadable. The outlook for U.S. corn markets is inextricably linked to what happens to the U.S. ethanol industry, which depends, in turn, on the level of government subsidies and mandates.

We develop a stochastic partial equilibrium model to simulate outcomes for the corn market for the /09 marketing Ethanol to gain insight into these linkages.

Food Prices and Ethanol Mandates. Andy May / Ma By Andy May. In addition, this period ( to ) saw some periods of drought in the U.S. and Russia, which affected corn and wheat prices.

Fuel prices affected the cost of shipping food and, to a. Scott Irwin and Darrel Good • renewable fuels standards • Onthe EPA announced the long-awaited RFS standards forand and the biomass-based diesel mandates for As outlined in a farmdoc daily article last week ( ), market expectations for the proposal were: i) relatively large biomass-based diesel mandates; and ii) ethanol mandates above.

The Drought and the Biofuels Disaster by temporary suspension” of America’s corn-ethanol mandates to “give some respite to the market and allow more of the crop to.

The drought and drought book burning crops across the Midwest and sending corn to record prices is leading to calls for an end or at least an easing of the government requirement that corn-based ethanol be.

Robert Bryce says the ethanol mandate is bad for consumers and the environment. Margo T. Oge argues that the Renewable Fuel Standard is crucial to the development of a range of alternative fuels.

So long as ethanol is no more than 10% of a gallon (much higher than Canada or Europe), ethanol use must fall as we use less gasoline rather than rise, as the mandates require.

If we ever buy many electric cars or switch from corn to cellulosic sources of ethanol, as other impossible mandates pretend, then corn-based ethanol must fall even faster. The new ethanol mandate is perhaps the most disappointing program in the Energy Policy Act of Since taking effect inthis measure has.

The EPA denial of a RFS waiver to decrease Ethanol ethanol mandate following the drought is based on the belief that current mandates will have minimal impact on corn and livestock prices.

Considering the environmental drought and price relations among the crop (corn and soybean), livestock (beef and poultry), and ethanol markets, the empirical Cited by: 6.

Ethanol Intensifies Drought Crisis Ethanol Sucks. Written by Despite an avalanche of requests from Midwestern states and meat industry groups to waive ethanol mandates during the drought, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks.

For more. By relaxing a federal ethanol mandate, the U.S. Environmental Protection Agency could have counteracted the impact of the drought on corn prices, a. The administration, which also issued its long-delayed ethanol mandates for and on Monday, defended its veering away from Congress' targets by citing market constraints that it says have Author: Alex Guillén.

As we've all noticed there's a drought going on in the American heartland. As many have noted this is leading to soaring prices of three main crops, corn wheat and soya.

For that American. Abstract: The ethanol mandate in the federal Renewable Fuel Standard increases corn prices and food prices.

This harms consumers and distorts the. The ethanol industry becomes critical to the government and the auto industry meeting the increasing future clean air mandates. Accordingly, the Ethanol lobby becomes very powerful. the US is experiencing its worst drought in over a century, so ethanol production will crash due to the lack of corn.

The loss of ethanol will probably see gasoline prices riseAuthor: Jen Alic. Downloadable (with restrictions).

The drought in the U.S. Midwest resulted in volatile crop prices. With field crops constituting a major input in livestock production, livestock producers sought a waiver to Renewable Fuel Standard biofuel mandates.

They believed such a waiver would mitigate crop-price volatility; given crops are major inputs in biofuel production.

Drought Renews Focus on Ethanol Mandate. Aug By Quinn Ford. The federal government is mandated to dedicate a certain amount of the nation’s corn every year for ethanol production.

Some Illinois lawmakers say the Environmental Protection Agency should lower that amount this year because of the devastating drought that has Author: Quinn Ford. “Mandates for food-based biofuels like corn ethanol increase hunger,” said Kelly Stone, a policy analyst with ActionAid USA, a nonprofit advocacy group working to end poverty.

An already. FORT WORTH, TEXAS - Amid record-setting wild fires out West, recent climate assessment sounding the alarm about threats from rising global temperatures, and data showing will be one of the hottest years on record, new research from the University of Wisconsin finds that the federal corn ethanol mandate is contributing to climate change.

According to the research, which is. Showing something of a tin ear, the U.S. corn ethanol lobby has taken the position that the impact of the drought on gasoline prices will be small, and that there is no need for the EPA to waive Author: Bill Sweet.

There’s bipartisan consensus that ethanol mandates have been an utter policy failure. But getting rid of them still looks like a long shot.

InCongress passed the Energy Independence and Author: Review-Journal. DECATUR — The U.S. Environmental Protection Agency will be tasked with deciding whether to waive corn ethanol production mandates included in the Renewable Fuels Standard.

As a result of a Congressional mandate passed in and expanded inover 40 percent of this year’s greatly depleted corn crop will be diverted from food and livestock, and instead be. Together, King Corn and ADM form a lobbying powerhouse, and now it is asking Congress for more.

Last June, it convinced the Senate to double the ethanol production quota, to 15 billion gallons. One Cornell University study estimates that corn ethanol takes 40% more energy to produce than it yields, but most studies center on an input/output ratio of.

The FQD is relevant to the present discussion in that it establishes a limit of 10% for ethanol blending within EU member states, which are obligated to adopt national laws in conformance with the requirements of the directive.

Canada currently mandates 5% ethanol on a federal level, a policy in place since Decem In addition, many. The most recent four-week average for ethanol production is the lowest in more than two years and down more than 15% from the beginning of this year.

Many ethanol plants have reduced production rates, while others have temporarily idled production altogether. Meanwhile, ethanol exports have slowed to a crawl. Our Editorial: End the ethanol mandate The Detroit News Published p.m. ET Oct. 24, Forcing refiners to blend the corn-based fuel into gasoline is a hand-out to farmers and costly to.

the Renewable Fuel Standard. The RFS mandates that a minimum quantity of ethanol be blended into gasoline in the United States each year. The RFS mandated that 4 billion gallons (b gal) of ethanol be used in and that the amount rise gradually to b gal by File Size: KB.

WASHINGTON, Mar. 1, - Ethanol already supplies over 10 percent of the U.S. gasoline market and the fuel’s share is growing. Yet Congressman Bill Flores, who wants to see ethanol capped at 9.

The ethanol mandate just raises costs above whatever the least costly alternative is. That mandate tax creates winners and losers in the economy, just as any other tax increase. The U.S. energy boom and low gas prices have wreaked havoc with the federal government's mandate to blend more ethanol and other biofuels into fuel supplies, leaving the Obama administration under Author: Ben Wolfgang.

Sensitive land like grassed buffers, streambanks and wetlands are being planted with corn to fulfil federal ethanol mandates and maximize corn growers’ profits. Many U.S.

ethanol refineries are powered by coal, hardly the most environmentally-friendly option. Current ethanol production systems may actually emit more greenhouse gases than. In fact, Iowans bought more ethanol-free gasoline in than what EPA projects the entire United States will be able to buy in just a few more.

Ethanol Mandate Ignores the Free Market. damage done by government mandates and subsidies in the corn ethanol industry. No government policy can restore the corn lost to Author: Salim Furth. This time, a drop in production--thanks to drought conditions in the midwestern states that produce it--is harming corn ethanol exports and putting further pressure on the fuel vs.

food : Antony Ingram.Due to the financial crisis ethanol exports plunged and producers were not stocking due to lack of credit, therefore ethanol prices went way down; then sugar prices went up (today are in a record high, as India lost a significant % of its harvest due to a drought in ) so those sugarcane plants that produce both ethanol and sugar began.

Louisiana and Washington require ethanol to make up 2 percent of the total volume of fuel sold, while the other states specify Ea blend of 10 percent ethanol and 90 percent gasoline.