OPEC Sabre Rattling: Biofuel Backlash

By Douglas A. McIntyre Published Jun 6, 4:55AM EDT

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OPEC is getting sick of developed countries working on alternative energy. Why, the cartel asks, should it invest more in oil exploration, if it is to eventually be replaced by technologies like windmills and electric cars? The head of OPEC said that efforts to find oil alternatives could risk driving oil prices "through the roof". No reason to be subtle. Use direct threats. “If we are unable to see a security of demand…we may revisit investment in the long-term,” the chief of OPEC stated.

The cartel is planning to spend $130 billion through 2012 to raise oil output.

But, OPEC did offer some hope, especially to the large oil companies. The organization said it would need outside investment to improve its ability to produce oil. State-run oil companies in the OPEC nations may not be able to provide all of the capital to expand production.

OPEC’s plan to add nine million barrels a day to its current 30 million between now and 2020 could be a major lift to international exploration and production companies like Exxon (XOM). In exchange for infrastructure investment, multi-national oil companies could gain access to special rights to refine and sell the products of the exploration that they fund.

Unless, of course, the green interests promoting biofuels have their way. In that case, OPEC may not want outside money. It may just raise the prices on the oil it already produces.

The cartel has decided to use the stick of raising prices and the carrot of allowing large oil companies the chance to make more profit. Who can blame them?

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.