In early March 2026, a series of major events caused the price of oil and petroleum products to spike exponentially, which has had almost incalculable consequences on the global economy, but one side effect is a surging demand for biofuel alternatives to petrol and diesel and the infrastructure needed to make this happen.
The complete picture is complex, given that oil prices affect so many elements of the world economy, which themselves have cascading effects on other industries and costs.
However, in the short term, the United States-based Renewable Fuels Association suggested that the country should adopt a higher biofuel blend, suggesting that selling E15 more widely and all year round could save motorists up to 30 cents per gallon of fuel.
Is this an effective long-term solution? Are there any ramifications for biofuel prices during an oil shock? Will this lead to a fundamental rethink in how biofuel is used in the future?
To understand all of this, we need to start by explaining the connection between oil crises and biofuels in the first place.
What Is An Oil Crisis?
An oil crisis is any situation where the cost of oil barrels increases exponentially, which not only affects motorists but also nearly every industry, as they require either logistical services or power supplies which are reliant in some way on fossil fuels.
The most consequential oil crisis in history happened in 1973, when the Organisation of the Petroleum Exporting Countries (OPEC) organised an embargo which caused oil prices to quadruple within a year and fundamentally change economic and world events for decades afterwards.
The causes and consequences were broad and complex, but the biggest for the purposes of the biofuel sector was a focus on alternative fuels and an understanding that there may be a day when crude oil and fossil fuels are no longer viable to use as fuel.
In particular, Brazil launched its Proalcool programme, which made it, at the time, the world’s biggest biofuel producer and significantly reduced its reliance on imported energy stocks.
How Does An Oil Crisis Affect Biofuel Prices?
With CNN describing the March oil crisis as the biggest disruption in supplies in history, the effects of an oil crisis on the energy transition will become very clear very quickly.
According to Biofuels International, importers and producers of biofuel have quickly seen both demand and production increase exponentially, with palm oil (a common first-generation biofuel feedstock) increasing to its highest prices in over a year.
However, whilst these costs have increased, they are still significantly cheaper than fossil gas and crude oil, making them still cheaper as a source of fuel and further increasing demand.
Oil crises, whilst dramatic and often somewhat disruptive when they happen, often have much more significant effects in the future, and what will happen to biofuel in a world following the 2026 oil crisis will likely take years, if not decades, to truly ascertain.
How Will An Oil Crisis Affect Biofuel In The Future?
The 1973 oil crisis fundamentally changed the world’s relationship with fossil fuels; from the early 20th century up until 1973, cheap, plentiful fossil fuels had created a world built around and heavily reliant on cars, with long highways, major ring roads and huge amounts of sprawl, suburbanisation and exurbs.
It was thought that the oil would last forever, but it took a major oil shock and just six months of an oil embargo from five countries to make it clear that this was no longer the case.
Every country that was affected by the shock reacted differently; the UK responded with the three-day week to conserve energy resources, the United States installed strict emissions and fuel economy limits in what later became known as the “Malaise Era”, Brazil installed a huge biofuel programme, and many countries began to develop electric cars.
Some of these changes were reversed in the early 1980s in the wake of a second oil crisis, which ironically led to an oil surplus as many customers switched to smaller, more economical cars and utility companies invested in alternative energy sources for power plants.
With the results of COP30, the rise of electric vehicles and a focus on green energy, it is possible that the long-term effects of the 2026 oil shock could ultimately lead to an acceleration and extension of biofuel programmes which already exist.
The biofuel policies in India and Indonesia, both already driven by concerns regarding the reliance on foreign oil supplies, may not only remain but potentially intensify.
Indonesia had cancelled plans to mandate a 50 per cent biodiesel blend, but the recent shocks have caused it to potentially reconsider in order to preserve its oil reserves, and Thailand is considering doing the same.
