Biofuel Promoted as Alternative to Crude due to Increasing Current Crude Oil Prices

After Faith Birol, the chief economist of the International Energy Agency, warned that crude prices worldwide pose a threat to the global macroeconomy, the Global Renewable Fuels Alliance or GRFA is requesting the G20 to pass policies on biofuels in order to decrease the nation’s damaging crude oil dependence.

The chief economist recently gave a blunt warning that the world economy may face another recession due to increased prices of crude oil. Such levels of the crude oil price chart came before every recession going back to the early parts of the 1970′s. The latest one that started in 2008 was preceded by the highest oil prices on record, around $147.50 a barrel.

The GRFA said that production of biofuels worldwide is presently contributing more than 1 million oil barrels (equivalent) to the supply of energy globally. The GRFA anticipates global output to increase by around 3% in 2012 without any important changes in policy.

GRFA’s spokesperson Bliss Baker said that effort must be made to promote the creation of crude oil alternatives like biodiesel and ethanol. According to the IEA, biofuels can make 27 percent of the transport fuels worldwide by 2050, added Bliss.

OPEC, or the Organization of Petroleum Exporting Countries, has publicly recognized that policies on energy efficiency together with boifuel utilization will reduce oil use all over the world.

The GRFA said that the current crude oil price increase will be especially difficult to underdeveloped nations that are crude oil’s net importers. As crude prices increase even by a slight amount, the effect on the nations’ trade balance is harmful. At present, 38 out of  47 poorest nations in the world are crude oil’s net importers. Out of the 38 nations, 25 import their entire crude oil needs.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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