OPEC blames biofuels for the rise in oil prices!!! No, seriously!

[JohnWxy]

Hey ! I think that president of OPEC must post to this forum!!

Here's the open letter response to OPEC from several renewabel fuel associations:

http://www.goodfuels.org/wp-content/uploads/2008/07/rfa-ft-ad_final.pdf

Biofuels are reducing global dependence on oil. According to the International Energy Agency,
“biofuels have become a substantial part of faltering non-OPEC supply growth, contributing around 50% of
incremental supply in the 2008-2013 period.” Without the growing production and use of biofuels worldwide,
IEA calculates that more than one million barrels per day of new oil production would be required. At $140 per
barrel, that would yield more than $50 billion in additional revenue for your cartel members this year alone.


Competition is the antidote for cartels. The growing volume of biofuels in the global fuels market
is helping to keep world oil and gasoline prices lower than OPEC may like. A recent Merrill Lynch analysis shows
that biofuels keep world oil prices 15% lower than they otherwise would be. In Brazil, gasoline prices have not gone up in two years because of competition from ethanol. In the U.S. gasoline prices could be $0.50 higher or more per gallon without biofuels. A respected economist has noted, without biofuels your crude oil prices would be $35 per barrel higher. Or, put another way, today’s ethanol is keeping oil prices 25% lower than you would like. On behalf of the world’s energy users, we regret the inconvenience that competition may cause you.

Among many factors driving up oil prices, none involve biofuels. Indeed, the list of factors
driving oil prices higher is long. It includes a weak dollar encouraging increased speculation, geopolitical concerns
including a possible military conflict with Iran, cost overruns and persistent project delays in the world's oil patch,
anxiety about scarce supplies and the fall off of long-term production, and robust demand growth in the developing
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actually, the estimate of $35 pre barrel higher is an under-estimate. Urbanchuk failed to consider that to obtain a gallon of gasoline you have to expend 1.23 gallons of petroleum to produce it. so the estimate should be that the price of a barrel of oil would be at least $43 per barrel higher if ethanol wasn't being supplied to the market effectively replacing 864 million barrels of oil.

[liberal N proud]

1. Of course, The law of supply and demand

As the supply increased due to the additive of ethanol, they needed to increase the price to pay for the storage of that extra oil.
:rofl: