US Department of Energy: Biofuels Lower Gas Prices

The US DOE went on the defense for biofuels in a press release last week. They tackled one of the hottest topics of today - price - but from a different perspective, the effect of biofuels on the price of petroleum. You can read the whole release here.

The release states that in the US for 2008, biofuels will have displaced the use of 5% of all petroleum.

This 5% decrease in demand amounts to a $0.20 to $0.35 reduction in price at the pump for petroleum products.

The report also stresses that this is the impact of "first generation" biofuels. Second generation technologies, like cellulosic-ethanol and algae-biodiesel, are much more energy efficient, which translates to increased volume at lower costs.

Other good quotes from the release:

Today’s Biofuels Account for Only a Small Percentage of the Increase in Global Food Prices.

Higher oil and gas prices leading to increased costs of fertilizer, harvest, and transportation

Increased demand as developing countries grow and people improve their diets

Two years of bad weather and drought leading to poor harvests in parts of the world

Export restrictions imposed by some countries