Oil Recovery Boost for Biofuels

Posted Mark Sutton Industry News


The Biofuels sector – including ethanol, known in Australia as E10 and biodiesel – has been buffeted by a slump in the oil price.

Each business has its own contracts, but biodiesel in particular is inextricably linked to the price of oil, including feedstock which is a major component of the manufacturing process.

But there are growing signs that the oil price has at least stabilised.

It finished trading at (US) $48.50 a barrel last week after slumping to as low as $27, a 12-year-low early in the year.

The International Energy Agency (IEA) said last weekend that there are signs that oil has hit is floor and investment will begin to flow.

IEA  executive director Faith Birol told The Times that it was his view that oil had hit a floor.

“In a normal economic environment, we will see the price direction upwards, rather than downwards.”

Supply from non-Opec members is expected to drop by 700,000 a barrel this year.

The biofuels sector has been boosted by the introduction of a biofuels mandate in Queensland on January 1, 2017 and a major reform of the mandate in NSW after eight years of operation.

There is now a policy platform for investment  to take the Australian industry to the next level.

A rising oil price will deliver further confidence in the sector.