Price interconnection of fuel and food markets: Evidence from biodiesel in the United States

Abstract

Biofuel has attracted international attention over the past decades as a carbon-neutral fuel that effectively reduces carbon dioxide emissions. From 2000 to 2019, biodiesel production grew 50-fold globally (US Energy Information Administration, 2021). Many economists have analyzed the food versus fuel issue, particularly by examining the price links between agricultural feedstocks (e.g., soybean, corn, sugarcane) and energy goods (e.g., ethanol, biodiesel, crude oil, gasoline) to identify the proper balance between food security and climate change prevention. Several existing studies focused on biodiesel markets in European countries since the region accounts for a large share of global biodiesel production (