With oil hitting a record US$135, many travellers are opting to stay closer to home for their holidays their summer. But as bad as fuel prices may seem now, they could be worse if it weren’t for renewable biofuels such as biodiesel.New data from the International Energy Agency show that global biofuels production has cut consumption of crude oil by 1 million barrels a day, offering savings of US$120 million a day.
Merrill Lynch commodity strategist Francisco Blanch says that oil and gasoline prices would be about 15% higher now if biofuel producers were not increasing their output. The biodiesel industry is playing a key role in helping to address many of our nation’s economic, environmental and energy security woes.
According to the U.S. Energy Information Administration, the major factors contributing to the rising cost of regular petroleum diesel fuel include: rising cost and restricted supply of crude oil; tight refining capacity due to growing domestic and international diesel fuel demand; increasing transportation costs; and higher taxes on diesel fuel compared to petrol.
In 2007, biodiesel production in the U.S. hit the 500 million gallon mark, displacing 20 million barrels of petroleum imports, while also creating 21,803 new jobs nationwide and adding US$4.1 billion dollars to the U.S. Gross Domestic Product (GDP). In addition, biodiesel reduces lifecycle greenhouse gas emissions by up to 78%, while producing 3.5 units of energy for every 1 unit of energy it takes to make the fuel.
Joe Jobe, CEO of the National Biodiesel Board says: “While oil companies are making record profits and not making long-term investments to help stabilize prices, the biofuels sectors are making substantial investments in new renewable energy refinery capacity, and research into new non-edible feedstock supply for the future. Biofuels offer the only immediate renewable alternative to petroleum. It’s more important than ever for the U.S. to continue to work toward energy independence by encouraging the use of domestically produced, renewable fuels such as biodiesel.”
So despite the fact that fuel prices are predicted to rise continually in the short term, biodiesel is an instrumental part of mitigating that pain at the pump over the long term.