In Brazil, the driving is sweeter

by Trish Regan

29-03-06

Wouldn't it be nice if, one day, we didn't have to worry about the ups and downs of the gas markets?
Well in Brazil, the fifth largest country in the world, there's a plan to become free from imported oil, not in the next 30 years, not in the next 10, but by the end of this year. That's primarily because while the rest of the world was mapping the human genome, scientists in Brazil were mapping the DNA of sugar in an effort to create a cleaner, cheaper alternative to gasoline: sugarcane ethanol.

They succeeded. Brazil's ethanol is about 30 % less expensive than gasoline; according to the World Bank, it's about 50 cents cheaper per gallon to produce sugarcane ethanol. And although ethanol gets slightly less mileage, it's still cheaper on a per-mile-driven basis.
"The way we figure it, ethanol will be cheaper than gasoline as long as the price of oil is over $ 45 a barrel," said William Bernquist, coordinator for research and development at the Sugar Cane Technology Institute in Piracicaba, Brazil.

With oil upwards of $ 60 a barrel, and no relief in sight, Bernquist predicts that ethanol will stay cheaper for some time.
"We started our ethanol program in the '70s because of the oil crisis in the '70s," he said. "And so we had to survive."
And "survival" meant finding a home-grown source of fuel, says Eduardo Carvalho, president of Sugar Cane Agroindustry Union.
"We had no money to pay for the import of oil," he told.

As chief economic advisor to Brazil's finance minister in the 1970s, Eduardo Carvalho pushed for government subsidies to help the fledgling sugarcane industry take shape. Carvalho told that it's a good feeling to know that by the end of the year his country will no longer have to rely on the Middle East for oil.
"(It's) extremely important," he said. "We feel very proud."

Beginning in the 1970s, every gas station in the country was required to have at least one ethanol pump and the government mandated that all gasoline be mixed with ethanol.
"We began to blend increasing quantities of ethanol in our gasoline pool," Carvalho said.

But, as the ethanol began to replace gasoline, that led to another development: a brand new kind of car called a "flex vehicle." The car gives you the option of using a gasoline ethanol blend or 100 % ethanol depending on whatever is cheaper. In San Paolo, Brazil, ethanol is the cheaper fuel to use.
Today, 70 % of new cars sold in Brazil are flex vehicles, which cost no more than a regular car.

With the fuel environmentally cleaner to burn and the car cheaper to run, you've got to ask whether there is any downside to the fuel.
Carvalho says the biggest downside is the oil industry.
"They aren't able to sell their product. … Basically, the people who produce oil, they don't like us… because we are getting their markets. … It's very simple."

Source: CBS Broadcasting Inc.