Ethanol holds down crude oil price - US RFA
17 April 2008 23:46 [Source: ICIS news]
HOUSTON (ICIS news)--The US ethanol industry said on Thursday that crude oil prices would be even higher but for the biofuel, which has come under sharp attack this month amid global unease about rising food prices.
“Without the expansion of biofuel production…world oil demand would increase and so would the price,” the Renewable Fuels Association (RFA) said.
Global ethanol production, which is expected to hit 16.2bn gal in 2008, will help displace the equivalent of 1m bbl/day, the association said.
Crude oil prices would be 15% higher if it were not for ethanol, the RFA said, quoting an estimate by a Merrill Lynch analyst cited in a Wall Street Journal report.
“At today’s record prices, that would equate to $132/bbl,” the association said.
Crude oil ended Thursday at $114.86/bbl, down from a $114.93 record close on Wednesday.
According to the RFA, ethanol is also helping keep a lid on surging US gasoline values.
US gasoline prices could be 25% higher without ethanol, while diesel prices would be another 16% higher, the association said.
The RFA, which represents US ethanol producers, also dismissed charges that corn-based ethanol was solely responsible for driving up food prices.
“It is also often overlooked that prices for commodities like wheat and rice have risen higher than others and that these are crops not used in ethanol production,” it said.
Ethanol critics often claim that ethanol demand is luring farmers away from other crops to grow corn for biofuel feedstock.
US corn prices hit record highs this week.
Prompt corn in Chicago ended Thursday at $6.03/bushel, unchanged from Wednesday, while futures for July 2009 delivery closed at $6.42/bushel.
For more on ethanol visit ICIS Chemical Intelligence
Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
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Author: William Lemos+1 713 525 2653
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