US ethanol sector claims big oil fears biofuels

17 June 2008 19:12  [Source: ICIS news]

NASHVILLE, Tennessee (ICIS news)--The US ethanol industry on Tuesday accused oil companies of a smear campaign against biofuels prompted by fears that ethanol will take market share from fossil fuels.

“Oil companies oppose ethanol because biofuels could potentially take up to one third of US motor fuel demand from them,” said Renewable Fuels Association (RFA) president Bob Dinneen.

Dinneen charged that oil companies were involved in a public relations operation aimed at misleading the public about the benefits of ethanol over regular fuel. He said the campaign was highly financed and included research and newspaper editorials.

“It is hysteria and it will not succeed,” he told delegates at the opening of the 2008 Fuel Ethanol Workshop & Expo held this week in Nashville, Tennessee.

In addition to being targeted by big oil, ethanol is also taking flak for problems that are actually caused by them, Dinneen said, blaming the global surge in food costs to soaring crude oil and gasoline prices.

“Farmers only get 19 cents of every US dollar spent on food,” he said, arguing that the figure shows the agricultural sector cannot take the full blame for higher food prices.

Dinneen said soaring food prices were also due to droughts, more demand for food in China and India and speculative commodity trading, issues he said have been often ignored in the mainstream media.

“Ethanol accounts for only 3% of the jump in food prices, but is instead taking 97% of the blame", he said, claiming that investment funds today control more grain than the whole US ethanol industry combined.

Quoting a Merrill Lynch study, Dinneen said crude oil prices would be 30% higher if it were not for gasoline demand displaced by ethanol.

“That would also mean even higher food prices if it were not for biofuels,” he said.

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By: William Lemos
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