Biofuel Increasingly Competitive if Oil Surge Lasts

Biofuels would be increasingly competitive if crude oil prices, which are back near all-time highs, were to go beyond $60 a barrel, officials at the International Energy Agency (IEA) said on Tuesday.

Soaring oil prices have encouraged major consumers worldwide to sharply increase their use of “green” biofuels, made from sugar cane, vegetable or grain oils.

But in most parts of the world the additional costs for producing biofuels make the fuel uncompetitive without hefty tax rebates from governments.

“Biofuels are getting more competitive due to the surge in oil prices but these would need to be somewhere between $60 and $100 a barrel for biofuels to be competitive without subsidies,” IEA biofuel specialist Lew Fulton said after a seminar on biofuel options.
Reuters