Sunday, July 6, 2008

OPEC President blames Ethanol for rise in price of Oil

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According to OPEC president Chakib Khelil, one of the reasons for the rise in crude oil prices includes “intrusion of bioethanol on the market” which is responsible for 40% of the rise. The other 60% was due to a weak dollar and geopolitical worries. Interesting.

He didn’t explain why ethanol would drive crude prices higher but he curiously mentions that lack of supply is not a problem. He also added that Western investment embargoes on Libyan and Iran and the War on Iraq has also limited production.

The bioethanol part is interesting the me.The other things are understandable.  The war isn’t helping and our weakened economy isn’t doing us any favors. That is something that has to be dealt with and I don’t know how will happen. However, I thought ethanol was supposed to be a different story.

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I fear that we’re going to pay hell to disengage from the oil market if alternative fuels are being blamed for rise in oil prices. Not that ethanol is a perfect or desired substitute but it is definitely something to watch out for.  I wonder if it will  become too expensive for us to move towards alternative fuels or other sources of energy with a situation like this.

Oil companies and oil producing countries obviously stand to lose from our sustained efforts to become more environmental. Since, the rise in prices seems to have no end, I can’t imagine how successful we’ll be in fighting oil companies and dealing with OPEC’s ability to control the price of oil.

On the bright side of this mess, supposedly Mercedes-Benz wants to eliminate petroleum from its lineup by 2015 which isn’t too far away. By looking to battery eclectics, fuel cells and highly efficient internal combustion engines that can operate on biofuels, if successful Mercedes-Benz may become a leader in disengagement are destructive attachment oil. I love oil like the next person, but damn its just too costly to deal with.

I’m looking forward to the day when electric cars, or even solar powered cars are in vogue and petroleum powered cars are uncool. Until then, time to pump $30-$50 worth of gasoline into our cars every week.

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