July 14, 2008

OPEC president must be delusional

How else can anyone explain OPEC president Chakib Khelil's comment that "the intrusion of bioethanol on the market" is responsible for 40 percent of the increase in oil prices? Just check out the article on MarketWatch if you can't believe it, either.

Khelil said the weak dollar and geopolitical worries are responsible for the other 60% rise in crude oil prices. All of this came from an Algerian newspaper. Khelil is also the Algerian energy minister. And if the report is accurate, clearly he doesn't understand that ethanol replaces, as in reduces demand, for oil. Less demand = lower prices.

Of course, the oil cartel OPEC doesn't live in reality, or at least not the same reality as the rest of us. In fact, Khelil told the paper that oil supplies are sufficient, that supplies are balanced with demand and that the current rise in prices isn't good for anyone. Except, of course, for OPEC and Big Oil, who are enjoying record dollars coming their way. But they don't count in his altered state of reality where everything -- but biofuels, apparently -- is peaches and cream.

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