Dynamic impacts of high oil prices on the bioethanol and feedstock markets

► World economy experienced 'dual shocks', which were caused by skyrocketed oil prices and grain prices between 2007 and 2008. ► Sharp increases in ethanol production in response to high oil prices were considered as a major driving force to 'ag-flation' in the United States. ► Applying a time series econometric tool, called the 'structural vector auto-regression model', we evaluated relationship between ethanol production and corn prices. ► The result shows that ethanol production affects corn prices in the short run, while corn prices are lowered as other corn demands (feed for livestock or export demand) decline in the long run.