Brazil considers lower ethanol blends

Brazil is reportedly reviewing lowering the percentage of ethanol blended in gasoline in response to rising ethanol prices. Currently, regular gasoline sold at fuel stations in Brazil contains 25% of anhydrous ethanol. In general, ethanol is cheaper than gasoline in Brazil, but lower yields of sugar cane and the fact that demand has overreached supply has increased the price for the biofuel. If the amount of ethanol in gasoline is lowered, the government hopes that ethanol demand will ease and the price will subsequently drop. In addition, ANP, the country’s oil industry watchdog is expected to tighten the supply of ethanol by requiring producers to have stocks of anhydrous ethanol equivalent to 8% of their April output. Distributors would be required to have inventories equal to 15 days of average sales of finished gasoline. (July 5-8, 2011)