Ethanol Sales To Exceed Gasoline In Brazil By 2020, Petrobras To Shrink Oil Business To Focus On Biofuels
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Biopact:
According to Sergio Gabrielli, chief executive of state-run oil firm Petroleo Brasileiro SA (Petrobras), Brazil could become the first country to consume more biofuels than gasoline in the near future. Brazilians will use more ethanol than the petroleum fuel by 2020 when flex-fuel cars will dominate the country’s car fleet. The rapid rise in the sale of flex-fuel cars, which can run on any mixture of gasoline and ethanol, is the main reason behind the expected jump in ethanol sales.
Across most of Brazil, ethanol made from sugar cane is considerably cheaper than gasoline on an energy equivalent basis. Record sugar harvests and ethanol output combined with very high oil prices have tilted the balance firmly in favor of the biofuel. The effect can be felt throughout the economy, as cheap ethanol has contributed to lowering inflation (earlier post). Moreover, as a highly efficient and environmentally sustainable biofuel, Brazilian ethanol is not confronted with the food versus fuel dilemma. In fact, world sugar prices have been falling despite record ethanol output (more here).
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