A very insightful article here by Tom Bergin on Reuters about the first wave of biopetroleum producers - well worth a careful read.

Biofuels still only produces just 1% of total transport fuel in the world - so the growth potential could be massive, especially if like me you think peak oil will happen in the next 20 years. So why haven't the oil companies taken to it?

It's not as if with oil at 60 dollars plus a barrel, they don't have the cash.

The answer is "technology ... because the current first generation of biofuels technology gives a competitive edge to agribusinesses rather than oil companies. The simple manufacturing processes employed today mean that the key to profitability in biofuels production is feedstock costs. Access to cheap seeds and grain provides an edge, not expertise in operating complex facilities, the oil companies' specialty."

This will not continue apparently because the next generation of biofuels "... involve producing gases from cellulose-rich material including straw and waste lumber, which is then converted into liquid fuel. The feedstock costs much less than vegetable oils, and less land is needed to produce a given quantity of fuel".

Cynics at this point might say, now we know why President Bush's administration's has such enthusiasm for cellulosic biofuels . . . it's the future of Big Oil !

Meanwhile, relatively small companies like Switzerland's Biopetrol Industries AG are sitting pretty while the rest of us are waiting for the cellulosic biofuel revolution. Don't hold your breath - I suspect it might well be a good 10 years off yet. This technology is not off the shelf and there are always long lead-times in the investment horizon of the Oil Majors.