The Obama administration finds unlikely ally in OPEC
The Obama administration finds unlikely ally in OPEC

OPEC stated that the Obama administration has found an improbable ally in the organization’s efforts to push more biofuel into the nation's gasoline supply.

According to the government's most recent forecasts, the demand is likely to go up by 1.5% in the current year to around 139 billion gallons (526 billion liters).

This much increase is enough to easily accommodate small increases in ethanol quotas without breaking the so-called ‘blend wall’ that according to the refiners, will put a cap on blending at nearly 105 of the total gasoline and diesel supply.

Based on the data from first quarter, it is likely to be even higher. In first quarter, gasoline use was surged by over 3%, which was the fastest in more than a decade.

Those calculations were helpful in explaining why biofuel backers were up in the arms over renewable fuel goals proposed by the Environmental Protection Agency. The agency unveiled the goals on Friday, reaffirming the agency's stance that the use of ethanol in fuel had hit a saturation point until the installation of more infrastructure and equipment.

The proposed volumes were short as compared to those laid out in a 2007 law, but has still allowed for increased blending. This has also put an end to the years of doubt over the future of the nation's complex and contentious renewable fuels policy.

Experts said that the US biofuels industry is expected to gain a larger share of one of the world's biggest motor fuel markets, as Saudi Arabia is pumping out near record volumes of crude and few experts have forecasted any significant recovery in prices any time soon.

Scott Irwin, a professor of agricultural economics at the University of Illinois said, “The market incentives are there for ethanol, without this (EPA) proposal”.

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