Main Article Content
Abstract
The biodiesel policy brought changes in the analysis of crude palm oil (CPO) prices. Supply and demand are no longer the main factors, but the correlation between CPO and crude oil prices. The main objective of this study is to provide an empirical study of the relationship between CPO and Indonesian Crude oil Price (ICP) in various periods of mandatory biodiesel policy in Indonesia. Using the Ordinary Least Square (OLS) method of time series data from 2001-2021, this study shows that in general CPO and ICP are positively and significantly correlated, but the price link is very dependent on the biodiesel policy that is implemented. ICP and CPO are positively and significantly correlated in the biodiesel mandatory period with limited subsidies (2006-2015) and in the biodiesel mandatory period with incentives which combined with progressive CPO export levies tariff (2020-2021). ICP and CPO are not correlated during the mandatory biodiesel period, combined with incentives and a fixed CPO export levy tariff (2016-2019). When CPO and ICP prices are strongly and significantly correlated, stock increases are not associated with a decrease in CPO prices. However, when the CPO and ICP prices are not significantly correlated, the stock increase is followed by a decrease in the CPO price. CPO price stabilization only occurs during the biodiesel mandatory period, combined with incentives and a fixed CPO export levy tariff.
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References
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- Prabheesh, K. P., & Laila, N. (2020). Asymmetric effect of crude oil and palm oil prices on Indonesia’s output. Buletin Ekonomi Moneter Dan Perbankan, 23(2), 253–268. https://doi.org/10.21098/bemp.v23i1.1304
- Priyati, R. Y., & Tyers, R. (2016). Priyati, R. Y., & Tyers, R. (2016). Economics price relationships in vegetable oil and energy markets price relationships in vegetable oil and energy markets. In Annual Australiasian Development Economics Workshop.
- Sanders, D. J., Balagtas, J. V., & Gruere, G. (2014). Revisiting the palm oil boom in South-East Asia: fuel versus food demand drivers. Applied Economics, 46(2), 127–138. https://doi.org/10.1080/00036846.2013.835479
- Schwerdt, G., & Woessmann, L. (2020). Empirical methods in the economics of education. The Economics of Education, 3-20. https://doi.org/10.1016/B978-0-12-815391-8.00001-X
- Singagerda, F. S., Hendrowati, T. Y., & Sanusi, A. (2018). Indonesia growth of economics and the industrialization biodiesel based CPO. International Journal of Energy Economics and Policy, 8(5), 319–334.
- Sukiyono, K., Cahyadinata, I., Purwoko, A., Widiono, S., Sumartono, E., Asriani, N. N., & Mulyasari, G. (2017). Assessing smallholder household vulnerability to price volatility of palm fresh fruit Bunch in Bengkulu Province. International Journal of Applied Business and Economic Research, 15(3), 1–15.
- Zuhdi, D., Abdullah, M., Suliswanto, M., & Wahyudi, S. (2021). The Competitiveness of Indonesian Crude Palm Oil in International Market. Jurnal Ekonomi Pembangunan, 19(1), 111-124. doi:https://doi.org/10.29259/jep.v19i1.13193.
References
Aprina, H. (2014). Analisis Pengaruh Harga Crude Palm Oil (CPO) Dunia Terhadap Nilai Tukar Riil Rupiah. Buletin Ekonomi Moneter Dan Perbankan, 16(4), 315–338. https://doi.org/10.21098/bemp.v16i4.15
Arintoko. (2021). The stock price response of palm oil companies to industry and economic fundamentals. The Journal of Asian Finance, Economics and Business, 8(3), 99-110. https://doi.org/10.13106/jafeb.2021.vol8.no3.0099
Arkeman, Y., Wibawa, D. S., & Syamsun, M. (2015). Analysis of Crude Palm Oil and Biodiesel Production in Indonesia: A Vector Autoregressive Model Approach. International Journal of Applied Engineering Research, 10(15), 35287-35290.
Arshad, F. M., Awad, A., & Hameed, A. (2012). Crude Oil, Palm Oil Stock and Prices: How They Link. Review of Economics & Finance, 3, 48–57.
Cadillo-Benalcazar, J. J., Bukkens, S. G., Ripa, M., & Giampietro, M. (2021). Why does the European Union produce biofuels? Examining consistency and plausibility in prevailing narratives with quantitative storytelling. Energy Research & Social Science, 71, 101810. https://doi.org/10.1016/j.erss.2020.1018100
De Gorter, H., Drabik, D., & Just, D. R. (2015). The economics of biofuel policies: Impacts on Price Volatility in Grain and Oilseed Markets. Palgrave Macmillan.
Drabik, D., De Gorter, H., & Timilsina, G. R. (2014). The effect of biodiesel policies on world biodiesel and oilseed prices. Energy Economics, 44, 80-88. https://doi.org/10.1016/j.eneco.2014.03.024
Dutta, A., Bouri, E., Saeed, T., & Vinh Vo, X. (2021). Crude oil volatility and the biodiesel feedstock market in Malaysia during the 2014 oil price decline and the COVID-19 outbreak. Fuel, 292, 120221. https://doi.org/10.1016/j.fuel.2021.120221
Gerasimchuk, I., & Koh, P. Y. (2013). The EU biofuel policy and palm oil: cutting subsidies or cutting rainforest. The International Institute for Sustainable Development, Geneva, Switzerland,(http://www. iisd. org/gsi/sites/default/files/bf_eupalmoil. pdf)..
Halimatussadiah, A., Nainggolan, D., Yui, S., Moeis, F. R., & Siregar, A. A. (2021). Progressive biodiesel policy in Indonesia: Does the Government’s economic proposition hold? Renewable and Sustainable Energy Reviews, 150, 111431. https://doi.org/10.1016/j.rser.2021.111431
Irawan, B., & Soesilo, N. I. (2021). Dampak kebijakan hilirisasi industri kelapa sawit terhadap permintaan CPO pada industri hilir. Jurnal Ekonomi & Kebijakan Publik, 12(1), 29-43. https://dx.doi.org/10.22212/jekp.v11i1.2023
Johari, A., Nyakuma, B. B., Mohd Nor, S. H., Mat, R., Hashim, H., Ahmad, A., Yamani Zakaria, Z., & Tuan Abdullah, T. A. (2015). The challenges and prospects of palm oil based biodiesel in Malaysia. Energy, 81, 255–261. https://doi.org/10.1016/j.energy.2014.12.037
Kochaphum, C., Gheewala, S. H., & Vinitnantharat, S. (2013). Does biodiesel demand affect palm oil prices in Thailand ? Energy for Sustainable Development, 17(6), 658–670. https://doi.org/10.1016/j.esd.2013.07.005
Kustiari, R. (2017). Price Behavior and Market Integration of Shallots in Indonesia. Jurnal Agro Ekonomi, 35(2), 77–87.
Lestari, D., & Oktavilia, S. (2020). Analysis of Palm Oil Price in Southeast Asia. AFEBI Economic and Finance Review, 5(2), 63-78. https://doi.org/10.47312/aefr.v5i02.494
Mayasari, F., Dalimi, R., & Purwanto, W. W. (2019). Projection of biodiesel production in Indonesia to achieve national mandatory blending in 2025 using system dynamics modeling. International Journal of Energy Economics and Policy, 9(6), 421–429. https://doi.org/10.32479/ijeep.8319
Murti, W. (2017). The influence of crude oil price in biodiesel and its implication on the production of palm oil: The case of Indonesia. European Research Studies Journal, 20(2), 568–580. https://doi.org/10.35808/ersj/659
Naylor, R. L., & Higgins, M. M. (2017). The political economy of biodiesel in an era of low oil prices. Renewable and Sustainable Energy Reviews, 77(April), 695–705. https://doi.org/10.1016/j.rser.2017.04.026
Paris, A. (2018). On the link between oil and agricultural commodity prices: Do biofuels matter?. International Economics, 155, 48-60. https://doi.org/10.1016/j.inteco.2017.12.003
Peersman, G., Rüth, S. K., & Van der Veken, W. (2021). The interplay between oil and food commodity prices: has it changed over time?. Journal of International Economics, 133, 103540. https://doi.org/10.1016/j.jinteco.2021.103540
Prabheesh, K. P., & Laila, N. (2020). Asymmetric effect of crude oil and palm oil prices on Indonesia’s output. Buletin Ekonomi Moneter Dan Perbankan, 23(2), 253–268. https://doi.org/10.21098/bemp.v23i1.1304
Priyati, R. Y., & Tyers, R. (2016). Priyati, R. Y., & Tyers, R. (2016). Economics price relationships in vegetable oil and energy markets price relationships in vegetable oil and energy markets. In Annual Australiasian Development Economics Workshop.
Sanders, D. J., Balagtas, J. V., & Gruere, G. (2014). Revisiting the palm oil boom in South-East Asia: fuel versus food demand drivers. Applied Economics, 46(2), 127–138. https://doi.org/10.1080/00036846.2013.835479
Schwerdt, G., & Woessmann, L. (2020). Empirical methods in the economics of education. The Economics of Education, 3-20. https://doi.org/10.1016/B978-0-12-815391-8.00001-X
Singagerda, F. S., Hendrowati, T. Y., & Sanusi, A. (2018). Indonesia growth of economics and the industrialization biodiesel based CPO. International Journal of Energy Economics and Policy, 8(5), 319–334.
Sukiyono, K., Cahyadinata, I., Purwoko, A., Widiono, S., Sumartono, E., Asriani, N. N., & Mulyasari, G. (2017). Assessing smallholder household vulnerability to price volatility of palm fresh fruit Bunch in Bengkulu Province. International Journal of Applied Business and Economic Research, 15(3), 1–15.
Zuhdi, D., Abdullah, M., Suliswanto, M., & Wahyudi, S. (2021). The Competitiveness of Indonesian Crude Palm Oil in International Market. Jurnal Ekonomi Pembangunan, 19(1), 111-124. doi:https://doi.org/10.29259/jep.v19i1.13193.