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Impact of energy prices on agricultural and energy markets: an integrated modeling approach
Citation:
Dodder, R., O. Kaplan, S. Tokgoz, A. Elobeid, L. Kurkalova, AND S. Secchi. Impact of energy prices on agricultural and energy markets: an integrated modeling approach. 37th IEAA International Conference, New York City, NY, June 15 - 18, 2014.
Impact/Purpose:
Here are the slides for the presentation at 37th IEAA (international association for energy economics) International Conference on June 15-18, 2014 in New York CIty, USA. http://www.usaee.org/usaee2014/program.aspx
Description:
The accelerated growth in biofuels markets has both created and reinforced linkages between agricultural and energy markets. This study investigates the dynamics in biofuel and agricultural markets under alternative price scenarios for both crude oil and natural gas. Two energy price scenarios are simulated using an integrated regional modeling framework previously developed to characterize and quantify the dynamic linkages between the energy system and agricultural markets. Comparison of the scenarios shows that biofuel markets are affected more by crude oil price changes than by changes in natural gas prices. However, natural gas prices shift the biofuel production mix. Higher natural gas prices coupled with high crude oil prices provide the largest impetus to the cellulosic ethanol market. The integrated modeling framework tempers the impacts of high energy prices on biofuel volumes and crop prices. Running the models independently overestimates the responses to shocks because there is no allowance for adaptive behavior by economic agents. These results point to the importance of understanding the feedbacks between these sectors.