The substitutive effect of biofuels on fossil fuels in the lower and higher crude oil price periods

Ting-Huan Chang and Hsin-Mei Su

Energy, 2010, vol. 35, issue 7, 2807-2813

Abstract: Various biofuels, including bioethanol and biodiesel are technologically being considered replacements for fossil fuels, such as the conventional gasoline and diesel. This paper aims to measure whether economic substitutability can be generated during periods of higher and/or lower prices of crude oil. The empirical results of the bivariate EGARCH model prove that this substitutive effect was occurred during the higher crude oil price period due to the significant price spillover effects from crude oil futures to corn and soybean futures, indicating that the increase in food prices can be attributed to more consumption of biofuels. We suggest more extensive research in the search for fuel alternatives from inedible feedstock such as pongamia, jojoba, jatropha, especially the 2nd generation biofuel technologies such as algae-based biofuels.

Keywords: Renewable energy; Bioethanol; Biodiesel; Crude oil; Substitutive effect (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (86)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:35:y:2010:i:7:p:2807-2813

DOI: 10.1016/j.energy.2010.03.006

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