Abstract

Ethanol is a widely produced fuel, as well as a fuel additive. Its price is closely related to the price of gasoline, its major substitute. This paper focuses on the impacts of the related variables on regional ethanol prices. Additionally, the length of the price dataset made it possible to isolate the impacts of COVID-19 on the ethanol prices. Using multiple regression and Confirmatory Factor Analyses, we found no significant correlation between the European and US ethanol prices because the major influencing factors were regionally different. In the case of the European ethanol markets, the positive factors were wheat, maize, and potassium chloride prices, while the European sugar and diammonium phosphate prices were negative. In the US markets, gasoline, sugar, and most of the artificial fertilizer prices were positive, while wheat prices were negative. Based on factor analysis, artificial fertilizers and maize factors proved to be important to the European markets, while US ethanol prices were driven by the crude oil-gasoline and raw materials factors. The COVID variable showed no significant connection with the EU prices, but negatively affected the US ethanol prices. This is explained by the different market characteristics, as the US is not only the major consumer, but also the major producer of the different oil products. Therefore, COVID-19 had a double effect on their oil and ethanol markets.

Highlights

  • The fossil energy resources of the Earth are finite, and their continued use causes evermore damage to the environment through global warming and pollution [1]

  • The COVID variable showed no significant connection with the EU prices, but negatively affected the US ethanol prices

  • COVID-19 had a double effect on their oil and ethanol markets

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Summary

Introduction

The fossil energy resources of the Earth are finite, and their continued use causes evermore damage to the environment through global warming and pollution [1]. Within a very short period of time, humanity must switch to the use of renewable energy sources, preferably by incorporating the concept of a circular economy, with as little further waste and degradation to soil, water, and air as possible [2,3,4]. Energy is a key issue in the world economy, especially in the transportation sector. As of this moment in time, biofuels show great promise as direct fuel substitutes. Second-generation production technologies are already available in an immature state, they are expensive compared to the first-generation technology.

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