page_title: Ethanol fuel in Brazil
section_title: Prices and effect on oil consumption
hierarchical_section_title: Ethanol fuel in Brazil / Prices and effect on oil consumption
caption_attribution_description: Map showing consumer price spread between gasoline E25 and ethanol E100 in Brazil by state. Data taken from the Brazilian Agencia Nacional de Petroleo, for week 26/10-01/11-2008. Publicly available data at ANP web site. Graphic design by the author with Photoshop using Brazilian template available at WikiCommons
context_page_description: Brazil is the world's second largest producer of ethanol fuel. Brazil and the United States have led the industrial production of ethanol fuel for several years, together accounting for 85 percent of the world's production in 2017. Brazil produced 26.72 billion liters, representing 26.1 percent of the world's total ethanol used as fuel in 2017.
  Between 2006–2008, Brazil was considered to have the world's first "sustainable" biofuels economy and the biofuel industry leader, a policy model for other countries; and its sugarcane ethanol "the most successful alternative fuel to date." However, some authors consider that the successful Brazilian ethanol model is sustainable only in Brazil due to its advanced agri-industrial technology and its enormous amount of arable land available; while according to other authors it is a solution only for some countries in the tropical zone of Latin America, the Caribbean, and Africa.
  In recent years however, later-generation biofuels have sprung up which don't use food crops that are explicitly grown for fuel production.
context_section_description: Most automobiles in Brazil run either on hydrous alcohol (E100) or on gasohol (E25 blend), as the mixture of 25% anhydrous ethanol with gasoline is mandatory in the entire country. Since 2003, dual-fuel ethanol flex vehicles that run on any proportion of hydrous ethanol and gasoline have been gaining popularity.  These have electronic sensors that detect the type of fuel and adjust the engine combustion to match, so users can choose the cheapest available fuel. Sales of flex fuel vehicles reached 9.3 million by December 2009, representing 39% of the passenger vehicle fleet. By mid-2010 there were 70 flex models available in the market and production by December 2010 reached more than 12.5 million flex vehicles including more than 500 thousand flex fuel motorcycles.
  Due to the lower energy content of ethanol fuel, full flex-fuel vehicles get fewer miles per gallon. Ethanol price has to be between 25-30% cheaper per gallon to reach the break even point. As a rule of thumb, Brazilian consumers are frequently advised by the media to use more alcohol than gasoline in their mix only when ethanol prices are 30% lower or more than gasoline, as ethanol price fluctuates heavily depending on the harvest yields and seasonal fluctuation of sugarcane harvest.
  Since 2005, ethanol prices have been very competitive without subsidies, even with gasoline prices kept constant in local currency since mid-2005, at a time when oil was just approaching US$60 a barrel. However, Brazilian gasoline taxes are high, around 54 percent,  while ethanol fuel taxes are lower and vary between 12% to 30%, depending of the state. As of October 2008 the average price of E25 gasoline was $4.39 per gallon while the average price for ethanol was US$2.69 per gallon. This differential in taxation favors ethanol fuel consumption, and by the end of July 2008, when oil prices were close to its latest peak and the Brazilian real exchange rate to the US dollar was close to its most recent minimum, the average gasoline retail price at the pump in Brazil reached US$6.00 per gallon.  The price ratio between gasoline and ethanol fuel has been well above 30 percent during this period for most states, except during low sugar cane supply between harvests and for states located far away from the ethanol production centers. According to Brazilian producers, ethanol can remain competitive if the price of oil does not fall below US$30 a barrel.
  By 2008 consumption of ethanol fuel by the Brazilian fleet of light vehicles, as pure ethanol and in gasohol, is replacing gasoline at the rate of about 27,000 cubic meters per day, and by February 2008 the combined consumption of anhydrous and hydrated ethanol fuel surpassed 50 percent of the fuel that would be needed to run the light vehicle fleet on pure gasoline alone. Monthly consumption of anhydrous ethanol for the mandatory E25 blend, together with hydrous ethanol used by flex vehicles, reached 1.432 billion liters, while pure gasoline consumption was 1.411 billion liters. Despite this volumetric parity, when expressed in terms of energy equivalent (toe), sugarcane ethanol represented 17.6 percent of the country's total energy consumption by the transport sector in 2008, while gasoline represented 23.3 percent and diesel 49.2 percent.
  For the first time since 2003 sales of hydrous ethanol fell in 2010, with a decrease of 8.5 percent as compared to 2009. Total consumption of both hydrous and anhydrous ethanol fell by 2.9 percent while gasoline consumption increased by 17.5 percent. Despite the reduction in ethanol consumption, total ethanol sales reached 22.2 billion liters while pure gasoline consumption was 22.7 billion liters, keeping the market share for each fuel close to 50 percent. The decrease in hydrous ethanol consumption was due mainly to high sugar prices in the international markets, which reached a 30-year high in 2010. This peak in sugar prices caused sugarcane processing plants to produce more sugar than ethanol, and as supply contracted, E100 prices increased to the point that several times during 2010 the price of 
caption: Consumer price spread between E25 gasoline and E100 by state. Red and orange show states with average prices below the break even range. Ethanol price should be between 25 and 30% cheaper than gasoline to compensate its lower fuel economy.
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