The economics of oil, biofuel and food commodities

Abstract

We study the effects on the food market of the introduction of biofuels as a substitute for fossil fuel in the energy market. We consider a world economy with an oil cartel and a competitive fringe of farmers producing energy in the form of biofuels. Farmers also produce food and sell it on the world food market. We determine the resulting relationship between prices in the energy and food markets and characterize the cartel's extraction path and the price path of energy. We show that the price of food will be growing as long the oil stock is being depleted, whether population is growing or not, and that it will keep growing after the oil stock is exhausted if population is growing. An analysis of the effects of the productivity of land use in either the food or the biofuel sectors is carried out.Keywords: Biofuel; Oil depletion; Population growth; Energy price; Food price RésuméNousétudions l'effet sur le marché des aliments de l'introduction sur le marché de l'énergie de biocarburants, comme substitut aux combustibles fossiles. Nous supposons uneéconomie où cohabitent sur le marché de l'énergie un cartel pétrolier et une frange compétitive de cultivateurs qui produit de l'énergie sous forme de biocarburant. Les cultivateurs produisentégalement des produits agricoles qu'ils vendent sur le marché des aliments. Nous caractérisons la relation qui en résulte entre le prix de l'énergie et le prix des aliments, ainsi que le sentier d'extraction du cartel pétrolier et le sentier de prix de l'énergie. Il est démontré que le prix des aliments va croître aussi longtemps que le stock de pétrole n'est pasépuisé, et cela que la population soit croissante ou non. Il continueraà croître une fois le stock de pétroleépuisé si la population est croissante. Les effets de l'amélioration dans la productivité de la terre dans la production d'aliments ainsi que dans la production de biocarburant sont analysés.

Utilização de Resíduos de Borra de Café e Serragem na Moldagem de Briquetes e Avaliação de Propriedades

“…A utilização de alternativas para a produção de energia também auxilia a economia e o reaproveitamento de resíduos de produção agrícola e/ou agroindustriais, como palha de milho, sabugo de milho, casca de arroz, casca de café, bagaço de cana-de-açúcar, casca de soja entre outros resíduos ou subprodutos que possam vir a ser utilizados como matéria-prima para biocombustíveis ou bioenergia [3,4,5,6].…”

Substitution between biofuels and fossil fuels: Is there a green paradox?

“…As pointed out by [25], prior to 2008, there is little work making the link between climate policies and exhaustible resources when policies are non-optimal or international agreements are incomplete. 2 Recent dynamic models that depict the adverse response of resource extracting firms to anticipation of taxes or substitute production include [41,42,25,11,17,12]. Hoel [25] assumes that carbon resources remain cheaper than the substitute and analyses the situation where different countries have climate policies of different ambition levels.…”

“…4 For static analysis of energy substitution, see [21,44,31,32,3,34]. Bahel et al [2] developed a dynamic model but their focus was on food prices. 5 Fischer and Salant [14] examined the Green Paradox in the presence of a subsidy for renewable resources.…”

The 2014 oil bust: Causes and consequences

“…For example, Matesanz et al (2014) observe a persistent increase in the degree of co-movement of the commodity prices from mid-2008 to the end of 2009, particularly for metals, oil, grains, and oilseeds, and Bahel et al (2013) find high correlation between oil prices and food prices. The 2014 oil price collapse showed that these regulations failed to prevent inefficient oil price reactions to non-fundamental factors, yet, it is unlikely to have any further tightening of regulations, simply because the oil price collapsed, which actually had a positive effect on general consumption.…”

“…It is particularly interesting to note that the oil bust of 2014 was completely unexpected, since the price collapse was not preceded by the spike, as it was the case in 1991 and 2008 -the price of crude oil just simply collapsed from a gradually rising uptrend. Thus, it is very important to understand the potential causes and consequences of the 2014 oil price collapse, especially given that the literature documents significant linkages between the oil prices and the financial markets, the macroeconomic cycle, and more specifically inflation, (see Hamilton, 1983Hamilton, , 2003Mork, 1989;Oladosu, 2009;Barsky and Kilian, 2004;Gómez-Loscos et al, 2012;Defina and Taylor, 1993;Soucek and Todorova, 2013).…”