Some New Ethanol Technology: Cost Competition and Adoption Effects in the Petroleum Market

Growing dependence on imported oil has been a source of concern in the United States, despite potential consumer benefits from low cost imports. Much attention has focused on exposure to the instability of the world petroleum markets. Disadvantages that are associated with an embargo include incomplete adjustment with asset-fixity and unemployment (Tolly and Wilman, Broadman and Bruce). Offsetting use of policy instruments, such as import tax increases that reduce demand while acquiring strategic petroleum reserve (SPR), are effective at improving consumer welfare when embargo uncertainty is present (Teisburg, T.J.). Similarly, Yucell demonstrated the effectiveness of a combined gasoline tax and SPR. Others have examined the possibility that welfare would be higher with the optimum tariff in place (Bizer and Stuart). Disciplines Behavioral Economics | International Economics | Taxation | Technology and Innovation This report is available at Iowa State University Digital Repository: http://lib.dr.iastate.edu/econ_las_staffpapers/252 Some New Ethanol Technology: Cost Competition and Adoption Effects in the Petroleum Market Paul Gallagher Department of Economics Iowa State University Ames, lA 50011 Paul Gallagher and Donald L. Johnson December 1995 Staff Paper # 275 Donald L. Johnson Vice President ^d Director, R&D Grain Processing Corp. Muscatine, lA