High Oil Prices? Blame Ethanol, OPEC Says

Posted on July 17, 2008. Filed under: Uncategorized |

Kenneth Rapoza reports from Wall Street Journal
 
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.
 
Suddenly, ethanol producers are getting hit from all sides–food and fuel. Ethanol lobbies made their pitch to G-8 leaders earlier this month, pleading with under-fire world leaders not to scrap ethanol programs in light of rising alarm that ethanol and biofuels are to blame for high food prices. Ethanol producers got no favors Wednesday with a new report by the Organization for Economic Cooperation and Development, the Paris-based rich-country club, which said biofuels do contribute to rising food prices. The OECD urged governments to pour subsidies into energy efficiency, instead.
 
Those outside attacks are helping paper over internal differences between the big ethanol lobbies, most notably Brazil’s longtime desire to knock down U.S. tariffs on imports of Brazilian ethanol. Brazil (and some congressmen) figure more Brazilian ethanol means cheaper gas. U.S. ethanol producers like the $0.54 per gallon tariff just fine.
 
Knowing Brazilian sugarcane ethanol reduces greenhouse-gas emissions by 90%  compared with regular fossil fuels.


Haase’s EASY answer – Lift tariff on Brazil and STOP subsidizing fuel from food sources (DAhhh)
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