Article Sidebar

Submitted
July 25, 2022
Accepted
December 7, 2022
Published
January 15, 2023
Download
PDF
Statistic
Read Counter : 335 Download : 347

Downloads

Download data is not yet available.

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.

Keywords

Biodiesel palm oil CPO crude oil mandatory policy

Article Details

License

Authors who publish with this journal agree to the terms:

Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

Creative Commons License

Jurnal Ekonomi Pembangunan is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License..

How to Cite
Limbong, N. F., & Halimatussadiah, A. (2023). The Link between Crude Palm Oil and Crude Oil Price in Various Periods of the Biodiesel Mandatory Policy in Indonesia. Jurnal Ekonomi Pembangunan, 20(2), 115–124. https://doi.org/10.29259/jep.v20i2.18475
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. 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
  2. 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
  3. 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.
  4. 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.
  5. 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
  6. 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.
  7. 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
  8. 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
  9. 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)..
  10. 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
  11. 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
  12. 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
  13. 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
  14. Kustiari, R. (2017). Price Behavior and Market Integration of Shallots in Indonesia. Jurnal Agro Ekonomi, 35(2), 77–87.
  15. 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
  16. 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
  17. 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
  18. 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
  19. 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
  20. 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
  21. 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
  22. 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.
  23. 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
  24. 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
  25. 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.
  26. 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.
  27. 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.