The Hindu Business Line : `Rising crude prices may boost use of vegetable oils'

RISING crude oil price is expected to result in higher use of vegetable oils and fats as fuel substitutes, Mr Thomas Mielke, Editor, OilWorld, said.

"If crude oil prices stays above $60 a barrel they would be a stimulant for using oils and fats as fuel substitutes unless prices of vegetable oils rise," he told a vegetable oils conference, Global India 2005.

Global oil production estimated at 143 million tonnes is equal to 2.6 million barrels of oil per day; while mineral crude production is at 82.8 million barrels a day.

While palm oil is being used as biofuels, rapeseed oil is favourable as fuel.

A major stumbling block in using oils and fats as fuel in the European Union is limited capacity, Mr Mielke said. "At present, the capacity of 3.7 million tonnes is fully utilised," he said. Trucks, he said, could be run on bio-fuels with minor modifications to their engines.

At present, the global oilseeds market is in a good balance. Production of oilseeds has increased faster than consumption over the past few years as acreage for grains has come under oilseed cultivation, Mr Mielke said. Yet prices would edge up because of the emerging demand for vegetable oils for bio-fuels, he said.

Global prices of palm oil and soya oil are expected to rise in the early part of 2006 as production is expected to slow faster than consumption, Dr James Fry, Chief of the UK-based LMC International, said.

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