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LONDON -- OPEC, the Organization of the Petroleum Exporting Countries, earlier this week warned Western countries that their efforts to develop biofuels as an alternative energy source risked driving the price of oil "through the roof."
Abdalla El-Badri, secretary-general of OPEC, said the powerful cartel was considering cutting its investment in new oil production in response to moves by the developed world to use more biofuels, The Financial Times reported.
The warning from OPEC, which controls about 40 percent of global oil production, came as the group of eight leading industrialized nations met on Wednesday with climate change at the top of its agenda. The United States and Europe want to use biofuels to combat global warming and to strengthen energy security.
OPEC has previously expressed skepticism about alternative energy, but El-Badri's comments mark the first clear threat that the cartel might act to safeguard its interests in the face of a shift toward biofuels, according to The Financial Times.
President Bush has pledged to cut U.S. petroleum use by 20 percent over the next 10 years through more efficient vehicles and a big increase in biofuel consumption. World production of biofuels, which are derived from agricultural commodities, such as corn and sugar, was equal to 1 percent of all road transport fuels in 2005.
El-Badri warned that biofuel production could prove unsustainable in the medium term as it competed with food supplies. Biofuels are one reason retail food prices are now heading for their biggest annual increase in about 30 years, the report said.
El-Badri said this meant the biofuel strategy championed by Bush and European leaders would backfire because "you don't get the incremental oil and you don't get the ethanol." In this case, he warned, oil prices would go "through the roof."
He said OPEC members had so far maintained their investment plans, but he warned: "If we are unable to see a security of demand...we may revisit investment in the long term."
OPEC's plans, for now, are to invest about $130bn until 2012 to raise its oil output.