Brazil ethanol prices soar, fuel shortage looms
Reuters Africa
Tue Apr 19, 2011 8:06pm GMT
By Inae Riveras
- Switch to gasoline boosts anhydrous ethanol demand
- Shortages may cause lack of gasoline at service stations
- Gov't may be forced to reduce ethanol mix in gasoline
SAO PAULO, April 19 (Reuters) - Brazilian ethanol prices
are soaring in lockstep with surging consumer demand, putting
upward pressure on inflation and sparking fears of a shortage
of the biofuel in some parts of the country.
Brazil, home to the world's most vibrant biofuels market,
produces two types of ethanol from sugar cane -- hydrous and
anhydrous. Hydrous ethanol is used for automobiles that can run
on ethanol, whereas anhydrous ethanol is blended with all
gasoline in Brazil as a way of keeping a lid on fuel prices and
reducing consumption of fossil fuels.
But anhydrous ethanol prices have surged to record levels,
in part because supplies dwindled in between cane crops and the
new harvest is just getting underway. That may soon leave some
parts of Brazil in the unusual position of not having enough
ethanol to meet the government-mandated blend in gasoline.
Read more