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High Oil Prices? Blame Ethanol, OPEC Says
By Mr Ethanol | July 16, 2008
Wall Street Journal Blogs:
Ethanol is on the ropes because of the food versus fuel debate, but now a new heavyweight just stepped into the ring and this one has got some really big guns.
OPEC president Chakib Khelil has a new culprit for the rising cost of oil–ethanol. Mr. Khelil says about 40% of the recent rise in oil prices can be chalked up to ethanol, which accounts for about 1% of the world’s transportation fuel. The other 60%, apparently, is due to a weak dollar and “geopolitical worries.” The problem: OPEC’s boss doesn’t lay out the logic explaining why ethanol blended into gasoline is to blame for high oil prices.
Why ethanol falls afoul of big oil producers and oil companies is easier to explain. Oil companies don’t want to be forced to shell out for a whole new infrastructure for ethanol, from pipelines to special gas pumps. And ethanol blends in gasoline do make gas supplies go further–not good news for producers at a time when high prices are already starting to dent demand for gasoline, in the U.S. at least.
Big Ethanol is striking back. The world’s four largest ethanol lobbies, The U.S. Renewable Fuels Association, the Canadian Renewable Fuels Association, the European Bioethanol Association, and Brazil’s Sugarcane Industry Association joined forces in a full page open letter to Mr. Khelil published in the Financial Times on Wednesday.
The foursome call OPEC greedy, and say the cartel wants to kill U.S. ethanol mandates in particular in order to sell more oil, and make bigger profits when new oil discoveries are scarce. “New sources of energy are beginning to weaken OPEC’s grip on the world and threaten to reduce the $1.2 trillion OPEC nations will rake in this year from the exorbitant price of oil,” the letter said.
Topics: Ethanol, Oil, Prices |
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July 16th, 2008 at 6:53 pm
While I haven’t seen the print version of this ad, it can be found online here: goodfuels.org/opec/
July 16th, 2008 at 8:24 pm
Well, at least T.Boone Pickens and the ethanol industry appear to disagree with OPEC on this.
July 21st, 2008 at 11:14 am
i don’t think we should blame it to bio-ethanol!!! the comment is nonsense!!!
July 24th, 2008 at 11:25 am
Interesting — I definitely learned a little something from your post. Thanks for sharing.