Does Biodiesel Initiative Save the State Budget?
Sulistya Rusganto (a*) Anastasya Firdauzi (b) Nursilah Ahmad (c)
a) Center for Islamic Social Finance Intelligence, Faculty of Economics and Business, Universitas Airlangga
* sulistya[at]feb.unair.ac.id
b) Islamic Economics Study Program, Faculty of Economics and Business, Universitas Airlangga
c) Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia
Abstract
The Indonesian government has taken the initiative to gradually convert fossil based diesel fuels into biodiesel. This initiative aims to save the state budget as well as to encourage the use of renewable and environmentally friendly alternative energy. This study aims to analyze the effectiveness of the initiatives through investigating the effect of crude oil prices and implementation of the initiative on the price of crude palm oil as the raw material of biodiesel. The results of the study revealed that the crude palm oil increase as the crude oil price increase and the initiative in force, but not as much as the increase in the crude oil. The results imply that the initiative, at a certain level, able to save the state budget.
Keywords: Biodiesel, CPO, Crude Oil, State Budget, Energy Economics
Topic: Energy Economics