Abstract
AbstractWe disentangle the effects of biodiesel incentives and shale oil expansion on the long-run equilibrium price relationships among biodiesel feedstocks and crude oil in the United States (US) and European Union (EU). We find that the 2005 Energy Policy Act in the US substantially increased the responsiveness of soy oil, canola oil, and corn oil prices to crude oil price movements. However, in recent years, expansion in the global supply of crude oil from shale oil extraction has offset the effects of US biodiesel incentives and blending mandates. In the EU, the Indirect Land Use Change Directive of 2015 substantially reduced the responsiveness of biodiesel feedstock prices to crude oil price movements.
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