Monday, July 21, 2008

Ethanol Industry Responds to OPEC

OPEC's members and official spokespersons have been claiming publicly for a few month now that ethanol was partially to blame for high crude oil prices. The ethanol industry has responded to these claims from the oil producing nations by taking out an advertisement explaining their perspective (ad shown above).
That perspective being simple. Ethanol increases and extends petroleum supplies and that existence in the market place puts a downward pressure on petroleum prices. Additionally (my words not theirs) its my impression that the Ethanol Producers are also implying that ethanol will soon be a real competitor for petroleum worldwide offering choice.

I saw the initial story at the Biobased News and followed it over to the RFA's Press Release.

The groups –- the Canadian Renewable Fuels Association (CRFA), the European Bioethanol Fuel Associations, the Brazilian Sugarcane and Ethanol Industry Association (UNICA) and the US Renewable Fuels Association – were answering the charges by OPEC that ethanol was in part responsible for the soaring price of crude oil, a price that will fetch OPEC nations more than $1.2 trillion dollars this year alone.

Also worth noting is the advertisement's citing of the Merrill Lynch study which claims that ethanol's effect on prices is downward. As without ethanol the world's petroleum producers would need to produce one million additional barrels of crude a day. The price effect of ethanol in the marketplace is believed to reduce overall crude prices as much as 15% according to the Merrill Lynch report.

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