Brazil ethanol group blasts country's gasoline policy

22 November 2011 22:59  [Source: ICIS news]

HOUSTON (ICIS)--Brazil's sugarcane industry association Unica called for the country to stop controlling the price of its gasoline, saying on Tuesday that ethanol cannot compete in the market-place when the price of gasoline never moves.

Despite significant changes in the price of crude oil, gasoline prices in Brazil have not changed since 2009, said Unica president Marcos Jank during an industry event in Sao Paulo.

Unica is not campaigning for higher gasoline prices, but rather for a level playing field for ethanol and gasoline, Jank said, adding that a review of Brazil's tax policy on motor fuels is also needed.

"By 2020, more than 80% of Brazil's automobile fleet will have the flexible-fuel vehicle (FFV) technology, but that will matter little if ethanol… cannot compete fairly with gasoline," he said.

FFV automobiles can run on stand-alone ethanol or gasoline or in a combination of both fuels.

Unica's criticism of Brazil's gasoline policy is a common grievance in the ethanol industry, which believes the government is placing an artificial ceiling on the price of the biofuel.

Brazil's practice of keeping gasoline prices under tight control is part of a strategy to meet inflation targets, which, if missed, could cost the government dearly at the polls.

But ethanol makers claim that the lack of movement in the price of gasoline is increasingly hurting their industry, particularly when ethanol prices rise and FFV drivers, many of whom tend to prefer gasoline over ethanol, start migrating to gasoline.

For more on ethanol visit ICIS chemical intelligence

By: William Lemos
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