Ethanol’s Discount to Gasoline in Brazil Drops to Four-Month LowLucia Kassai
Ethanol’s discount to gasoline in Brazil, the world’s second-largest producer of the biofuel after the U.S., dropped to the lowest since June after rain delayed harvesting and millers slowed sales.
The discount narrowed to $1.63 a gallon in October through the 26th, according to information on the Rio de Janeiro-based ANP oil regulator’s website. The average price for gasoline was 2.83 reais a liter ($4.92 a gallon) and ethanol was 1.91 reais.
“Rains have slowed harvest and millers are holding more ethanol than usual, betting on a gasoline price increase,” Renato Dias, an analyst at Intl FCStone in Campinas, Brazil, said in a telephone interview.
Petroleo Brasileiro SA, the state-controlled oil company, is asking the government for authorization to raise local fuel prices in a bid to curb import losses. The Brazilian government, which controls the company’s board, caps the price of gasoline at the refinery as part of a policy to keep inflation in check.
Ethanol consumption in Latin America’s largest economy jumped to a two-year high in August amid a record sugarcane crop that spurred output of the biofuel, data on ANP’s website show.
About 57 percent of passenger cars in Brazil are flexfueled, allowing ethanol to compete with gasoline on the basis of price. The remainder of the fleet runs on pure ethanol or on E25, a mix of gasoline and 25 percent of ethanol.
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