Are Ethanol Policies Affecting Crop Prices? An Empirical Analysis of US Ethanol Policies

Abstract

Ethanol has been characterized as the alternate energy solution to the United States gasoline gluttony. There are many benefits that come with the consumption of ethanol, but there are costs that are often overlooked. Specifically, crop prices are increasing as a result of ethanol production due to corn being the main input for US ethanol. This paper investigates how much influence ethanol legislation has on crop prices over the past decade. Using a hedonic price model, various federal and state policies are tested to see if there is a statistically significant impact on corn, wheat, and soybean prices.