Seminar: "Did Renewable Fuel Standards Alter the U.S. Fertilizer Industry?"
- Wednesday, June 26, 2019 from 12:00pm to 1:30pm
- Linfield Hall, 406 - view map
Did Renewable Fuel Standards Alter the U.S. Fertilizer Industry?
Authors: Anton Bekkerman, Thomas Gumbley, and Gary Brester
Abstract: We examine price dynamics in the U.S. nitrogen fertilizer industry and information flow efficiency in spatially separated fertilizer markets. We consider both short-run and long-run relationships for two nitrogen fertilizer products in three U.S. agriculture production regions, the natural gas market, and the corn market, and assess the extent to which the 2005 and 2007 Renewable Fuels Standards altered price information flow relationships among these markets. The results show that long-run price adjustments occurred faster after the ethanol mandate implementations and that short-run price dynamics became more responsive to corn (demand-side factors), with diminished impacts of natural gas prices (supply-side factors). We then use a post-estimation information share framework to assess whether price discovery relationships are heterogeneous across different U.S. regions. We find that regions in which corn production significantly increased after the ethanol mandates had a 10–20 percentage point increase in the proportion of information that influences the fertilizer price discovery process.