More Fuel for Debate: Biofuel Production Lowers the Cost of Oil

Worldwide biofuel production is increasing so rapidly, according to a new analysis from Merrill Lynch, while other fuel sources cannot keep up with demand, that without the rising production, oil prices would be higher than they already are. The Wall Street Journal reported on the analysis yesterday, which adds yet another variable to the already complex debate over biofuel policy:

Oil and gasoline prices would be about 15% higher if biofuel producers weren’t increasing their output. That would put oil at more than $115 a barrel, instead of the current price of around $102. U.S. gasoline prices would have surged to more than $3.70 a gallon, compared with an average of a little more than $3.25 today.

Kit Batten and Jake Caldwell at the Center for American Progress point out that while a sustainable biofuels policy must account for the life-cycle greenhouse gas emissions of feedstocks, as well as land use and food production, diversifying energy sources lowers energy costs.

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One Response to “More Fuel for Debate: Biofuel Production Lowers the Cost of Oil”

  1. fthefarmer says:

    The Biofools are at it again, crops are finite, increased demand equals higher feedstock equals higher prices that know no limit. What the Ethanol crowd always fails to mention is that the energy consumed to make ethanol is more than energy gotten from ethanol. If you do not grow the excess feedstock and make the ethanol you would have that much more petroleum.

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