Despite near-record oil prices, investment in future oil production may be limited, the Organization of the Petroleum Exporting Countries says, due in part to increasing biofuel production.
The U.S. and European Union have already pushed forward policy that encourages replacing oil with biofuels, and the U.S. Senate passed a plan last week that would allow the U.S. government to sue OPEC for manipulating prices. OPEC's response?
"It's a really dangerous step. We are in the process of fighting that," OPEC President Mohammed al-Hamli said at a conference in Turkey.
The cartel also says that pro-biofuel policy could hurt oil production, which would drive up prices.
"Policy initiatives to support the development of biofuels may discourage refiners, as well as possibly crude oil producers, from investing in the needed capacity expansion," the group says.
The group also questions the benefits of biofuels. "The potential growth for world biofuels must be balanced against the global impact of large-scale biomass use and trade for energy purposes in terms of land-use changes, competition with food supply and other biomass uses, biodiversity, and competition for water resources," OPEC says.
"In addition, the impact of the widespread use of biofuels on air quality in urban areas has not yet been fully assessed."
The House of Representatives last month voted 345-72 to approve the "No Oil Producing and Exporting Cartels Act of 2007," or "NOPEC."