Economic analysis of U.S. ethanol expansion issues.

摘要

The dependency of the U.S. economy on crude oil imported from politically unstable countries, escalating energy demand world wide, growing nationwide environmental consciousness, and the Renewable Fuels Standards (RFS) government mandates are some of the primary factors that have provided a favorable environment for the growth and development of the U.S. ethanol industry.;The first essay derives decision rules for a discrete-time dynamic hedging model in a multiple commodity framework under expected utility maximization and basis risk. It compares hedging performance of three types of hedging models, namely constant hedging, time-varying static hedging model and the new dynamic hedging rule derived in this study. Findings show that natural gas futures contracts were effective instruments for hedging ethanol spot price risk before March, 2005, when ethanol futures trading was initiated on the CBOT. However, post-March, 2005, corn and ethanol futures contracts proved to be efficient hedging instruments. Results also indicate that ethanol producers may effectively decrease variance of cumulative cash flows by hedging using ethanol, natural gas and corn futures prices using the traditional techniques. The study concludes that using the new dynamic hedge model in a three period and two commodity set up, producers can effectively reduce variance of cumulative cash flow by 13.2% as compared to the 'no hedge' scenario.;In my second essay, I use choice based, conjoint analysis methods to estimate consumers' willingness to pay (WTP) for alternative transportation fuels in the U.S. In this study, I consider unleaded gasoline and ethanol, which may be derived from corn or three different sources of cellulosic biomass as alternative transportation fuels. Results suggest that age and household income are some of the socioeconomic variables that significantly influence consumer's choice behavior. Results indicate considerable consumer preference heterogeneity. Welfare effects are analyzed when consumers are faced with restricted choice sets. Results suggest that possible government mandates on the consumption of E-10 and E-85 diminish welfare of individuals belonging to the segment 'Conventional Gasoline Acceptor'. Similarly, individuals belonging to 'Ethanol Acceptor' segment experience welfare losses if corn grain ethanol is not available as an alternative transportation fuel.;Ethanol is increasingly being used as a gasoline oxygenate and a volume extender in the refinery and blender industry in the U.S. This paper estimates refinery and blender factor demand and evaluates price responsiveness of inputs. The study also develops and tests hypotheses regarding existence of structural change in the industry's demand for inputs. It determines whether there is a common shift point and adjustment rate for structural change in all the refinery and blender inputs by using gradual switching multivariate regression techniques and maximum likelihood methods. Results suggest a structural change in factor demand for inputs in the industry that occurs at different points and rates. Results also suggest that the demand for inputs, except for capital and unfinished oil, has become more inelastic over time.