The thought is that since we're ramping up the production of biofuels, we won't need as much gasoline in the future.

If gas is abundant and cheap, we'll never move to anything else. For the oil producing countries, why would they limit their output?

On the other hand, if you knew you weren't going to be able to meet the demand anyway, why would you drop billions on new refineries - especially with a convenient scapegoat like biofuels to blame.

I think the oil producing countries want to keep a stable (and high) price for oil.

Biofuels are more polluting than gasoline. Because of the energy it takes to produce and deliver them, and they have less BTU than gasoline, so you get less MPG in your car...