May 31, 2008

OPEC President Blames Ethanol For High Oil Prices

OPEC president Chakib Khelil blamed speculation and ethanol for rising oil prices.

Khelil also linked the diesel fuel market to the rise in oil prices.

"This crisis originates from the introduction of ethanol onto the market, which contributed to reduced diesel production," said Khelil.

Less diesel fuel production in turn increased oil prices across the board, said Khelil, highlighting the impact of biofuels on oil markets.

Source : OPEC chief insists speculation behind price rises

I am having a hard time following his logic here but the facts are easy enough to check. Since ethanol has been used as a motor fuel for over 100 years I assume that what he means by the introduction of ethanol would be when the U.S. first set mandates for it's use. The first mandate was established in 2005 and began with the mandated use of 4 billion gallons of renewable fuels in 2006.

According to the EIA diesel fuel refining has increased since 2005 even as overall refining has decreased.

Diesel Refining
Total Crude Refining

So I don't totally know what to make of his comments. I think that they are just a general expression of OPEC's animosity towards renewable fuels. It reminds me of a quote out of the organization back in 2005.

"Our competitors, the alternative energy providers, are intensively pursuing research programs aimed at reducing the domination of oil and gas in the global energy market," Abdullah Salatt, Qatar's representative to OPEC, said. "Likewise, we should have our own independent programs."

Source : OPEC sees threat from 'alternative energy'

So while the rest of the world looks for solutions to the energy problems we all face, OPEC will be looking for ways to keep us addicted to their product.

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