Food for fuel or fuel for food?: The impact of biofuel production on the interactions between crude oil and food prices

This chapter adopts time-series techniques to analyse how biofuel production influences the relation between crude oil and agricultural prices, distinguishing the effect of crude oil as an input from the effect of biofuels. It further expands on the topic of the implications of biofuels on agricultural prices at a global level, being one of the first attempts to link together fuel and food sector in order to identify the role of biofuel on price transmission between the two sectors. In fact, biofuels create a new end-use for many agricultural commodities, increasing the demand for them. It pays particular attention to the price of the main biofuel commodities, and covers a period of over 30 years, which is divided in three sub-samples of about 400 observations each. This work, showing a clear relationship between the increase in food prices and expansion of biofuel production, provides further evidence for the necessity to take this into consideration when reshaping bioenergy policies.