GoodFuels

WSJ on Chakib Khelil

The Wall Street Journal blog Environmental Capital has posted about OPEC president Chakib Khelil’s recent comments blaming the high cost of oil on ethanol. Here’s what they have to say:

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.

Why ethanol falls afoul of big oil producers and oil companies is easier to explain. Oil companies don’t want to be forced to shell out for a whole new infrastructure for ethanol, from pipelines to special gas pumps. And ethanol blends in gasoline do make gas supplies go further–not good news for producers at a time when high prices are already starting to dent demand for gasoline, in the U.S. at least.

Indeed, OPEC fails to give an explanation for why ethanol is causing those skyrocketing prices. Seems like the Wall Street Journal’s figured it out!

The post also talks about the open letter printed in today’s Financial Times, penned by world biofuel leaders:

The foursome call OPEC greedy, and say the cartel wants to kill U.S. ethanol mandates in particular in order to sell more oil, and make bigger profits when new oil discoveries are scarce. “New sources of energy are beginning to weaken OPEC’s grip on the world and threaten to reduce the $1.2 trillion OPEC nations will rake in this year from the exorbitant price of oil,” the letter said.