The Financial Times reports today that Opec warned Western countries “that their efforts to develop biofuels as an alternative energy source to combat climate change risked driving the price of oil through the roof.” Preempting the G-8 meeting where energy security and global warming will be central issues, Abdalla El-Badri, OPEC’s secretary-general, said the powerful cartel was considering cutting its investment in new oil production in response to moves by the developed world to use more biofuels. He said OPEC members had so far maintained their investment plans but he warned: “If we are unable to see a security of demand…we may revisit investment in the long-term.â€
Mr El-Badri statements and warnings that biofuel production could prove unsustainable as it competed with food supplies reveal a deep rooted fear among OPEC members that the West’s biofuels project will ultimately reduce global demand for their product and eventually break their economic backbone. We are probably doing something right.