Today, the New York Times ran a front page story about the future of the Western oil companies, and it isn’t bright.  The premise of the story, is that Western oil companies biggest claims are in diminishing locations like the North Sea, and the new opportunities are being exploited by OPEC countries — hostile to Western influences.

This is an industry in crisis,” said Amy Myers Jaffe, the associate director of Rice University’s energy program in Houston. “It’s a crisis of leadership, a crisis of strategy and a crisis of what the future looks like for the supermajors,” a term often applied to the biggest oil companies. “They are like a deer caught in headlights. They know they have to move, but they can’t decide where to go.”

What this all means, is that without more investment in biofuels, we are going to become bigger and bigger slaves to OPEC.  This is a threat to our national security, not to mention our environment.  If there ever was a reason to support biofuels, this is it.

Today, the Consumer Federation of America issued this release:

Slashing Ethanol Production Would Raise Gasoline Prices
Consumer Group Warns EPA

7 Aug 2008 – Washington, D.C. – The Consumer Federation of America today submitted comments to the Environmental Protection Agency (EPA) that showed slashing ethanol production, as requested by the state of Texas in its request for a Waiver of the Clean Air Act Renewable Fuel Standard (RFS), would increase gasoline prices substantially. The comments were filed in response to a study prepared for the state of Texas by Phillip K. Verleger and Darrel B. Chodorow who erroneously claim increasing demand for gasoline and crude oil would lower prices.

“The suggestion that increasing demand will lower oil and gasoline prices is not only contrary to Economics 101 and what independent analyses by Wall Street firms, government agencies, and academic institutions have concluded,” said Dr. Mark Cooper, CFA’s Director of Research, “but the study’s authors do not provide one shred of evidence to support their strange argument.”

“The independent studies show that ethanol production is keeping gasoline prices form going much higher than they already are by providing an important global source of incremental non-OPEC fuel, reducing the pressure on U.S. refinery capacity that has been severely strained in recent years, and providing a low cost source of supply that is being blended with gasoline,” Cooper added. “The existing econometric models indicate that a reduction of ethanol production of the magnitude projected by the Texas waiver request would allow the oil industry to reverse the decline in refinery margins of recent months and increase the price of gasoline by almost $0.50 per gallon.”

“We looked at the movement of refinery output, imports, exports and inventories, as well as recent price changes and could find no evidence that the market is or would behave in the bizarre, counterintuitive way that the Texas theory predicts,” Cooper concluded. “It is critical that the EPA base its decision on the waiver request on a proper understanding of how current energy markets work in the real world.”

For copies of the comments, please send an email request to Dr. Cooper at MarkCooper@aol.com

Bob Dineen, head of the Renewable Fuels Association, penned an op-ed today in USA Today.  The thrust of his op-ed is that biofuels actually help keep fuel costs down.  Our favorite part:

The president of the Organization of Petroleum Exporting Countries, whose members will rake in over $1 trillion dollars this year, recently complained about the “intrusion into the market” from biofuels. Here’s why. According to the International Energy Agency, which represents industrialized energy consumers, without biofuels, demand for OPEC oil would increase by a million barrels a day.

Couldn’t have said it better ourselves.

The three largest biofuels trade associations in the US, Europe and Brazil have sent a letter to the head of OPEC accusing OPEC of “misleading” the world about biofuels.  According to this report by The Guardian (UK), the three organizations said:

“‘Since you, as head of Opec, provide no explanation for what in our view constitutes a self-serving and misleading statement that goes counter to any independent analysis of the fuels market today, one can only conclude that Opec views competition with biofuels as a direct threat,’says the letter signed by the European Bioethanol Fuel Association, the Renewable Fuels Association in the US, the Canadian Renewable Fuels Association and the Brazilian sugar-cane producers of Unica.”

Give ‘em Hell!