May 25, 2007

Oil Industry Says Biofuel Push May Hurt at Pump - New York Times

Oil Industry Says Biofuel Push May Hurt at Pump - New York Times

Good reporting from the NY Times about the dilemma created by the rise of biofuel use in the U.S. While a powerful high level, philosophical argument can be made about the need to wean ourselves off imported crude oil, the consequence may be a supply crunch that is very likely to substantially increase the price of gasoline or auto fuel equivalents.

Using less fuel is a worthy goal, but will only slow the rate of growth in demand. I foresee no scenario that will decrease the price per gallon. It can only rise as long as supply barely matches demand. In addition to pump prices rising, we may well see increases in the price of food made with corn derivatives.

Meanwhile we have the politicos tramping around the jungle feeding off the frustration of people paying higher prices at the pump. They will accomplish nothing except the perception that they are doing 'something' to protect the consumer. They should know better when the forces in play are way beyond their control.
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