Price Transmission in Petroleum Markets and Potential Feedstock Supply for Low-carbon Fuel Production: Implications for Emerging Energy Sources

  • Author / Creator
    Zhang, Wenbei
  • Low-carbon fuels are receiving increasing attention from governments worldwide as sustainable alternatives to fossil fuels. But prospects for these emerging industries are uncertain due to several economic barriers. This thesis presents two studies, each investigating a key factor influencing the prospects of the biofuel industry: (1) price transmission in petroleum markets, and (2) potential bio-feedstock supplies. The first study uses nonlinear time series techniques to investigate price transmission from crude oil to jet fuel and diesel, two important transport fuels with distinctly different industrial characteristics. Our findings suggest that both jet fuel and diesel have long-run equilibrium relationships with oil prices, asymmetric price adjustments and nonlinear price responses to oil price shocks. We also find that jet fuel appears to be more vulnerable to fluctuating oil prices than diesel. These price relationships may provide incentives for fuel producers, especially jet fuel producers, to diversify input sources away from fossil fuels and towards bio-feedstock, thereby resulting in a shift towards increased biofuel production. The second study assesses the availability of non-No. 1 canola in Alberta, a feedstock that is less desirable for human consumption than No. 1 canola, but that could be desirable as a feedstock for biofuel production. Using a township-level GIS approach, we find different spatial distributions of available non-No. 1 and total canola oil, as well as different levels of spatial and temporal variations in non-No. 1 oil. We also model a fuel-grade canola oil supply chain that prioritizes the use of non-No. 1 canola, and then select crushing sites based on the amount of annually accessible non-No. 1 canola oil in Alberta. These findings will be useful to stakeholders, including fuel producers and users, farmers, rural communities, and policymakers. The results of this thesis contribute to a better understanding of the petroleum industries, and provide insights into emerging low-carbon fuel markets, with implications for investors and policymakers wishing to promote a low-carbon economy.

  • Subjects / Keywords
  • Graduation date
    Fall 2021
  • Type of Item
  • Degree
    Master of Science
  • DOI
  • License
    This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.