Spatiotemporal analysis of ethanol market penetration

Consumption of ethanol in the United States has increased rapidly over the last few years, fueled by both higher crude oil prices and generous public support measures for renewable fuels. The contribution of ethanol to the transport energy mix varies markedly by state. Heterogeneity in ethanol adopt...

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Bibliographic Details
Published in:Energy economics 2013-07, Vol.38, p.128-135
Main Authors: Du, Xiaodong, Carriquiry, Miguel A.
Format: Article
Language:English
Subjects:
Alternative energy sources
Applied sciences
Biofuel incentive policy
Biofuels
Biomass energy
Crude oil prices
Density
Economic data
Economics
Energy
Energy consumption
Energy economics
Energy policy
Ethanol
Ethanol adoption
Ethyl alcohol
Exact sciences and technology
Fuel
Fuels
General, economic and professional studies
Gibbs sampler
Heterogeneity
Households
Income
Infrastructure
Market penetration
Markets
Markov analysis
Markovian processes
Methodology. Modelling
Monte Carlo simulation
Natural energy
Neighboring effect
Oil price
Petroleum industry
Prices
Renewable energy sources
Spatial analysis
Spatial autocorrelation
Studies
Transportation
U.S.A
United States
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Summary:Consumption of ethanol in the United States has increased rapidly over the last few years, fueled by both higher crude oil prices and generous public support measures for renewable fuels. The contribution of ethanol to the transport energy mix varies markedly by state. Heterogeneity in ethanol adoption and market development is investigated using a hierarchical, spatiotemporal model. A Bayesian Markov chain Monte Carlo method is employed for estimation of the proposed flexible model structure. Besides spatial dependence among neighboring states, differential inclusion rates of ethanol are found to be largely determined by national- and state-level biofuel incentive policies, relative gasoline prices, feedstock availability, household median income, MTBE bans, and density of fuel retail infrastructure. Our findings imply that increasing renewable fuel support as well as investing in extending the transportation and fuel retail infrastructure can result in higher ethanol consumption. •The contribution of ethanol to the transport energy mix varies markedly by state.•What happens in neighboring states is important for ethanol market development.•Ethanol adoption is affected by policy incentives, prices and local conditions.
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2013.03.012