Monday, February 23, 2009

Big Oil In Bed With Biofuels: The Future is Near

Most biofuels naysayers haven't taken the trouble to look at all the different ways that biological organisms can create energy and energy feedstocks. Brian Wang discussed Sandia National Lab's recent study predicting the production of 90 billion gallons a year of biofuels in the not-so-distant-future. Now Brian Westenhaus takes a good look at the involvement of big petroleum in the research and development of biofuels.
Big Oil is helping the biofuel industry move past the persistent perception that cellulosic-based fuel is five years from reality. “That would have been accurate five years ago,” Riva said. “It’s not accurate today.”

Meanwhile Exxon Mobil is in the media openly talking about its interest in biofuels. With an industry reputation of strong research and high powered engineering skills, Exxon Mobil getting into the business would mark a turning point for biofuels and for the long term viability of oil being an economy dominating club for the market manipulators.

...the news is that BP is in the biofuels business. Big Oil, with all the baggage the industry has to cope with in people’s perceptions has more incentive, capital, skill and management than any other segment of the economy. What the press and media overlook is that for over one hundred years the oil industry drove to lower fuel prices, expanded markets and a higher standard of living. Check your history till 1972 when the first embargo from OPEC began the market distortions. The oil industry had been a boom and bust business before OPEC, even more so since. No one craves a low priced, high volume, steadily profitable business more than Big Oil. Nearly two generations of oil industry people have endured a torrent of troubles. _NewEnergyandFuel
British Petroleum, Shell, Exxon, Valero, Chevron, and other big oil companies are researching, developing, and / or investing in production of biofuels. All of this at a time when oil prices are stuck in the doldrums. This tells you that at least most of these companies can see a time when producing biofuels will be competitive with producing petro-fuels. Sometime very soon.

Most people expect oil prices to rise sharply as soon as the global economic situation begins to revive. But as biofuels production becomes more economical, and scales upward in volume, petro-fuels will have a strong competitor. And competition generally helps constrain prices. I supppose the oil companies wanted to get in on the ground floor.

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