MercoPress. South Atlantic News Agency

Countries need to oil their wheels

The Organization for Economic Cooperation and Development (OECD), in conjunction with the UN, published a major agricultural study last week.

The study said that there are very few countries in the world that are able to produce biofuels that can compete on price with conventional fossil fuels. In fact, with the exception of Brazil, all countries are finding it very difficult to reduce their dependence on oil at all.

"In only very few countries is the required feedstock available at prices that would presently allow ethanol and biodiesel production to be competitive with transport fuels from crude oil without government support," said the report.

It is evident that the world (not just Brazil) must, at some stage, reduce its reliance on a finite resource but it is not clear when or how this will happen.

The OECD report was released in the same week that oil demonstrated its hold on the global economy; the price of a barrel of oil nudged up to US$75; Goldman Sachs predicted US$105 barrels in the not too distant future; the United States Federal Reserve Chairman Ben Bernanke continued to push up interest rates over worries of oil-fuelled inflation (which would likely slow the world economy); Chinese and Indian economies announced super growth, putting further strain on oil supplies; and political concerns in Iraq, Iran, Russia and Venezuela - some of the world's most important vendors of oil - continued to spook the oil reliant West.

There are further concerns oil is running out. Estimates say that if no more oil was discovered from this day onwards and if current trends of oil consumption continued, then we would use up the final drop of crude around 2046 forty years from now.

In reality, oil should last a fair bit longer than that. Rising oil prices are helping to finance the extraction of previously uneconomical oil; we still don't know exactly what resources will be found in the Pacific, Atlantic and on the Antarctic; and increasingly efficient extraction technology is able to refine previously unprocessed oil. In other words, oil companies are more than capable of squeezing every drop of oil out of the ground.

Yet all of this slightly clouds the issue that oil does have a life span "even if we cannot agree on a figure" and alternatives must be developed.

Take the EU for example. Transport accounts for 71 percent of EU oil consumption and yet the EU sets its member states a voluntary target - 5.75 percent of fuel sold on a forecourt must come from renewable fuels by 2010.

The European Parliament's expert on biofuels, Neil Parish MEP, recently wrote a report advising the EU how to improve its biofuel policy. Parish told the Herald that politicians are too prone to "paying lip service to their biofuel commitments" without putting in place "a real strategy" that will significantly extend biofuel usage.

Voluntary targets are not working, says Parish, who uses the example of the UK who currently have just 0.3 percent renewables on its forecourts.

The OECD study assumed "very strong growth" in ethanol production in Brazil, Canada and the United States and further sluggishness on the part of the EU could be folly, believes Parish, who doesn't want to be forced to import biofuels from the already established producers.

"Biofuels are an opportunity. In rural areas, they can create much more employment than fossil fuel alternatives and can provide a genuine socio-economic alternative in areas affected by a decline of native crops", comments Parish in his report.

As long as it is cheaper to import oil it seems political leaders will do so but Parish urges countries to make real investment now to reap long term gains.

By William Surman Buenos Aires Herald