The economic effects of covid-19 on the producers of ethanol, corn, gasoline, and oil

Andrew Schmitz, Charles B. Moss, Troy G. Schmitz

Research output: Contribution to journalArticlepeer-review

Abstract

The COVID-19 crisis created large economic losses for corn, ethanol, gasoline, and oil producers and refineries both in the United States and worldwide. We extend the theory used by Schmitz, A., C. B. Moss, and T. G. Schmitz. 2007. “Ethanol: No Free Lunch.” Journal of Agricultural & Food Industrial Organization 5 (2): 1–28 as a basis for empirical estimation of the effect of COVID-19. We estimate, within a welfare economic cost-benefit framework that, at a minimum, the producer cost in the United States for these four sectors totals $176.8 billion for 2020. For U.S. oil producers alone, the cost was $151 billion. When world oil is added, the costs are much higher, at $1055.8 billion. The total oil producer cost is $1.03 trillion, which is roughly 40 times the effect on U.S. corn, ethanol, and gasoline producers, and refineries. If the assumed unemployment effects from COVID-19 are taken into account, the total effect, including both producers and unemployed workers, is $212.2 billion, bringing the world total to $1266.9 billion.

Original languageEnglish (US)
JournalJournal of Agricultural and Food Industrial Organization
Volume18
Issue number2
DOIs
StatePublished - Nov 1 2020

Keywords

  • COVID-19
  • Corn
  • Ethanol
  • Gasoline
  • Oil
  • Refineries

ASJC Scopus subject areas

  • Food Science
  • Business, Management and Accounting(all)
  • Economics and Econometrics

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