Report
High Vegetable Oil Prices: Putin or Biofuels?
American Enterprise Institute
July 05, 2022
Key Points
- Russia and Ukraine are responsible for over two-thirds of global sunflower oil exports, and sunflower oil prices have risen over 50 percent since Russia’s invasion of Ukraine.
- But sunflower oil is only 10 percent of global vegetable oil production, and different types of vegetable oil are highly substitutable, meaning that an increase in the price of sunflower oil does not significantly affect the average price of all vegetable oils.
- Rising prices of vegetable oil over the past two years are more closely linked to a rapid increase in US demand for biofuels, driven by renewable fuel mandates.
Introduction
Like many commodities, vegetable oil prices are much higher than they were two years ago. Many commenters have linked these high prices to disruptions caused by Vladimir Putin’s invasion of Ukraine and other supply-chain issues. Russia and Ukraine are major producers of one type of vegetable oil, sunflower oil, but this report addresses whether, and to what extent, the near record level of vegetable oil prices is associated with Putin’s “war of choice” or the relatively recent, largely policy-driven expansion of biodiesel production.