ENCRUCIJADAS
1. S OBRE LOS MODOS DE PENSAR LA DISCAPACIDAD
1.3. Hacia un Modelo Cultural
This research has certain limitations. First, it does not incorporate the response of the market to the antidumping and countervailing laws issued in 2008 by the European Union on the change of the cointegration relationship before the instatement of the mandate. For that purpose, a larger data set that goes back farther in time might generate better results. Second, it leaves out the study of the market dynamics when no cointegration relationship exists in Periods 4 and 5.
This could be due to the impact of increased production from alternative feedstocks on the market relationship and the breakdown of the biodiesel – soybean oil cointegration after March 4, 2011. Further, this research paper can be enhanced if the Renewable Identification Numbers (RINs) were further analyzed in testing for the binding mandate. Also, a more rigorous
investigation of the causes for the presence of negative blender’s gross margins before the enactment of RFS2 would provide a better understanding of the market. The research also utilizes spot market data and leaves out the use of the theory of storage and one year forward prices where the dimension of the long run equilibrium is truly captured.
In terms of the interpretation of the results, it is important to note that conclusions based on this research are limited to assumptions made in the structural model that are specific to an Iowa biodiesel plant and Iowa prices. While this zero-profit relationship might be representative of US biodiesel to an extent, the true zero-profit relationship for the biodiesel market is
determined by the cost of the other feedstocks used. The true relationship can also be influenced by the spatial variation in the feedstock price and fixed and variable costs. These are expected
limitations to representing an entire market with one model. Thus we acknowledge that this is a simplification of the true market.
Moreover, although our discussion of the results is reasonable, some aspects of the market dynamics were left out. Blenders’ behavior may be influenced by the retroactive tax reinstatement. Blenders’ response to the expiration of the tax credit may have been mitigated by the common knowledge that the tax will be reinstated retroactively. That is, blenders may not have changed their level of operation despite the change in policy in anticipation of being reimbursed for the tax credit. Additionally, while the direction of causality in the long run must be from soybean oil to biodiesel with a binding mandate, the causality relationship is less defined as the mandate is being imposed. That is, the market reaction in the short run after a mandate level has been announced may reverse the causality. For the reasons outlined above, we
acknowledge that our research has its limitation and that there is plenty of room for the literature on the biodiesel industry to grow.
TABLES
Variable Count Mean Variance Range
April 13, 2007-March 1, 2013 Minimum Maximum
Iowa Biodiesel 304 4.044 0.785 2.525 5.850
Iowa Soybean Oil 304 0.442 0.010 0.263 0.656
Natural Gas 304 0.007 0.000 0.003 0.012
Chicago Biodiesel 308 3.97 0.858 2.43 5.88
NYMEX Heating Oil Nearby
Futures 308 2.51 0.392 1.16 4.07
September 4, 2009 – March 1, 2013
Chicago ULSD 183 2.662 0.225 1.726 3.402
May 8, 2009- March 1, 2013 Minimum Maximum
Glycerin 200 0.080 0.001 0.045 0.150
Methanol 200 0.155 0.001 0.075 0.204
Table 1: Summary Statistics for all the variables
Correlation
Coefficients Biodiesel Soybean Oil Natural Gas Glycerin Methanol
Biodiesel 1.00 0.94 0.11 0.19 0.55
Soybean Oil 1.00 0.09 0.33 0.52
Natural Gas 1.00 0.11 -0.06
Glycerin 1.00 0.41
Methanol 1.00
Table 2: Correlation Coefficients among the Variables
Notes: * Indicates significance at the 5% level.** Indicates significance at the 1% level.
Table 3: Johansen Cointegration Test for Biodiesel and Soybean oil
Trace test 5% c.v 1% c.v
Full
sample April 13, 2007 – March 1, 2013 r<0 56.1116 15.41 20.04 r<1 4.7850** 3.76 6.65 Period 1 April 13, 2007 - March 14, 2008 r<0 29.8553 15.41 20.04
r<1 3.2242** 3.76 6.65
Period 2 March 21, 2008 - January 23, 2009 r<0 26.7912 15.41 20.04
r<1 0.1181** 3.76 6.65
Period 3 January 30, 2009 - March 4, 2011 33.9297 15.41 20.04
0.020449** 3.76 6.65
Period 4 March 11, 2011 - January 20, 2012 r<0 19.755** 15.41 20.04
r<1 3.22* 3.76 6.65
Period 5 January 27, 2012- March 1, 2013 r<0 9.9283** 15.41 20.04
r<1 1.77 3.76 6.65
Period 2 -0.5979526 -7.960433
Period 3 -0.6509107 -7.324985
Full
Notes: * Indicates significance at the 5% level.** Indicates significance at the 1% level.
Table 4: Error Correction Results and Granger Causality
Tests Test Statistic
(January 9, 2009 - February 6, 2009) March 4, 2011
(February 18, 2011 -March 11, 2011) January 20, 2012
(January 13, 2012- February 10 2012)
Table 5: Kejriwal and Perron (2010) Test of Multiple Structural Breaks ̂
̂
̂
̂
FIGURES
Figure 1: Process Diagram of Soybean Crush and Biodiesel Conversion Source: Padhan et al.2011
Figure 2: Feedstock Used for Biodiesel Production Percentages, 2010 -2012 Source: US Energy Information Administration
0%
10%
20%
30%
40%
50%
60%
2010 2011 2012
Soybean Oil Recycled oils All other vegetable oil
Animal Fats
Figure 3: US Biodiesel Plants by Capacity in Mil of Gallons end of 2012 Source: Biodiesel Magazine Plant List
Figure 4: Biodiesel Plant Size Distribution in the United States by the End of 2012
Source: Biodiesel Magazine Plant List 55%
17%
15%
13%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
0-5 6-15 16-30 30<
Percentage
Plant Size per Millions of gallons
Figure 5: Percentage Plant Distribution by Feedstock Type Technology in the US, May 2013
Source: Biodiesel Magazine Plant List
4% 2% 1%
62%
1%
14% 18%
0%
10%
20%
30%
40%
50%
60%
70%
Figure 6: US Biodiesel Policies Timeline from 2001-2012
Figure 7: Renewable Fuel Standard Proposed Volumes by Year Source: US Energy Information Administration
0 5 10 15 20 25 30 35 40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Billions of Gallons
Cellulosic Biofuel Non Cellulosic Advanced Biodiesel
Conventional (Corn Based)
Figure 8: Mandate Biodiesel Volume in Bil of Gallons Source: EPA
0.25 0.35 0.45 0.55 0.65 0.75 0.85 0.95 1.05
2009 2010 2011 2012
Billions of Gallons of Biodiesel
Figure 9: B100 US Consumption and Production in Mil Gallons, 2001 -2011 Source: US Energy Information Administration
0 200 400 600 800 1000 1200
2000 2002 2004 2006 2008 2010 2012
Millions of Gallons'
Year B100 Production (Mil Gallons) B100 consumption(Mil Gallons)
Figure 10: B100 US Exports and Imports in Mil Gallons, 2001-2011 Source: US Energy Information Administration
0 100 200 300 400 500 600 700 800
2000 2002 2004 2006 2008 2010 2012
Millions of Gallons
Year B100 Exports (Mil Gallons)
B100 Imports (Mil Gallons)
Figure 11: The Biodiesel Market in Equilibrium Gallons per year
Price per gallon
Figure 12: The Biodiesel Market under the Impact of a Tax Credit
Price per gallon
Gallons per year
Figure 13: The Biodiesel Market with a Non-binding Mandate
Price per gallon
Gallons per year
Figure 14: The Biodiesel Market with a Binding Mandate
Price per gallon
Gallons per year
Figure 15: The Biodiesel Market under the Impact of a Binding Mandate and a Tax Credit
Figure 16: Biodiesel Pricing under a Binding Mandate Gallons per year
Price per gallon
Figure 17: Biodiesel Pricing with a Large Enough Rightward Shift in Supply that Unbinds the Mandate
Gallons per year
Price per gallon
Figure 18: The Biodiesel Market under the Impact of a Binding Mandate and a Tax Credit that is Large Enough to Unbind the Mandate
Price per gallon
Gallons per year
Tax Credit
Figure 19: Weekly Spot Biodiesel and Breakeven Value Over all Costs at Iowa Biodiesel Plant, April 13, 2007 - March 1, 2013
2 2.5 3 3.5 4 4.5 5 5.5 6 6.5
4/13/07 4/13/08 4/13/09 4/13/10 4/13/11 4/13/12
Price ($/gal)
Biodiesel($/gal) Biodiesel Breakeven
Figure 20: Iowa Biodiesel Price and Estimated Breakeven Price Errors, April 13, 2007 -March 1, 2013
$(0.60) $(0.40) $(0.20) $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40
4/13/2007 4/13/2008 4/13/2009 4/13/2010 4/13/2011 4/13/2012
Erros ($/gal)
Figure 21: Iowa Biodiesel Price and Estimated Breakeven Price Errors with Approximated Structural Breaks, April 13, 2007- March 1, 2013
$(0.60) $(0.40) $(0.20) $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40
4/13/2007 4/13/2008 4/13/2009 4/13/2010 4/13/2011 4/13/2012
Errors ($/gal)
Period 1 Period 2 Period 3 Period 4 Period 5
Figure 22: Chicago Biodiesel and Diesel Spot Prices, April 13, 2007 - March 1, 2013
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
4/13/2007 4/13/2008 4/13/2009 4/13/2010 4/13/2011 4/13/2012
$/Gallon
Chicago B100
ULSD
Figure 23: Biodiesel Blenders Gross Margins, April 13, 2007-March 1, 2013
-2.50 -2.00 -1.50 -1.00 -0.50 0.00 0.50
4/13/2007 4/13/2008 4/13/2009 4/13/2010 4/13/2011 4/13/2012
$/Gallom
Figure 24: Iowa Biodiesel Price and Estimated Breakeven Price Errors with Difference Soybean Oil Conversion Rates, April 13, 2007 - March 1, 2013
$(0.60) $(0.40) $(0.20) $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60
4/13/2007 6/13/2007 8/13/2007 10/13/2007 12/13/2007 2/13/2008 4/13/2008 6/13/2008 8/13/2008 10/13/2008 12/13/2008 2/13/2009 4/13/2009 6/13/2009 8/13/2009 10/13/2009 12/13/2009 2/13/2010 4/13/2010 6/13/2010 8/13/2010 10/13/2010 12/13/2010 2/13/2011 4/13/2011 6/13/2011 8/13/2011 10/13/2011 12/13/2011 2/13/2012 4/13/2012 6/13/2012 8/13/2012 10/13/2012 12/13/2012 2/13/2013
Error $/gallon
Errors( with 7.5lb/gal SBO conversion rate)
Errors (with 7.3 lb/gal SBO conversion rate)
Errors (with 7.4 lb/gal SBO conversion rate)
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