There might be some merit in the refiners position, but only if the marginal increase in capacity of biofuels was going to be sufficiently large to destabilise the price of gasoline. Refineries working at 91% capacity are probably a whole lot more profitable than refineries working at 77%. At the lower level they may not make enough money to merit further investment in capacity. But the refiner’s position is interesting in another way. It assumes that there will be no increase in demand for automotive fuels in the medium to longer term. Which if you look at the numbers on the US department of energy’s website is palpable tripe. If you examine the U.S. Total Gasoline All Sales/Deliveries by Prime Supplier (Thousand Gallons per Day) figures for regular gas and do some sums it shows that the US uses 1080505 thousand gallons more in 2006 than it did in 1983. UP 31% in 23 years. That would imply the volume of biofuels that are going to come on to the market from now until doomsday is 46978 thousand gallons/year.
Will the US driving public switch to cars with more efficient engines or cut the number of miles they travel enough to make that happen? Let me know what you think. Oh and please check the sums!
Its worth spending a little time on the US EIA’s website, if only for the definitions of what the different types of fuel are in the US.