Fuel is getting more expensive every day. Ethanol price reaches almost R$5 and gasoline goes from R$6; Brazilians are stunned and don't know what to do

The week started with a punch in the pockets of consumers. Several gas stations raised prices of gasoline to R$ 6,099 per liter, leaving many drivers astonished. There are two justifications: the rise in ethanol prices and the suspension of discounts given by distributors.

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The president of the Trade Union of Retail Fuels and Lubricants of the Federal District (Sindicombustíveis-DF), Paulo Tavares, stated that only last weekend, a liter of ethanol was R$ 0,30 more expensive. The impact on the pumps and on the consumer's pocket was R$ 0,20 per liter.

“It was the second weekend of increase in ethanol. like alcohol represents 27% of the gasoline blend, there is no way not to pass it on (to the drivers)”, says Tavares. He points out that the strong rise in the price of ethanol is due to the failure of the sugarcane harvest, due to the drought.

The situation regarding fuel prices in Brazil is critical, says Tavares.According to him, there are gas stations in several cities in the interior of the country without gasoline or ethanol.

And apparently the chaos will continue to grow and there is no prospect of regularization anytime soon. The new sugarcane crop, which should be harvested in May, should only reach the mills in July.

Therefore, consumers should prepare for further increases in alcohol and gasoline prices. “This time, Petrobras is not to blame. The problems are in the alcohol market”, stresses the president of Sindicobustíveis-DF. There are service stations in Brasilia where a liter of ethanol exceeds R$ 4,70.

Oil goes up last Friday (14/05) and Petrobras should increase, even more, the price of gasoline; Ethanol takes advantage and price should drop at mills

The price of a barrel of oil rose 1,86% (US$ 68,15), last Friday (14/05), increasing the difference for derived fuel. If the bullish sequence of crude oil in London is maintained, the Brazilian oil company Petrobras may increase, in the coming weeks, the price of gasoline and diesel at refineries.

As a result, ethanol is targeting an increase in the price of oil in order to reduce the competitiveness of gasoline and not suffer pressure. It is expected that, after consecutive highs, the price of ethanol will drop at the mills by the end of the week. With the reduction or at most stability, following the decline in sales prices by distributors, biofuel should regain competitiveness with gasoline and not suffer pressure.

Direct sale of ethanol from plants approved by the CCJ promises to stimulate competition and curb the increase in gasoline prices at gas stations

On May 5, the Constitution and Justice Commission (CCJ) of the Chamber of Deputies approved permission for the direct sale of ethanol from plants – bypassing distributors, to gas stations. The new measure can curb the increase in the price of gasoline and diesel, and ease the pockets of Brazilians.

It is still not possible to know exactly how much impact the direct sale of ethanol would generate on the price of biofuel in Brazil, since there is a lot of dependence on industrial logistics in each state. However, a study by Esalq-Log, in 2019, showed that the average cost of transporting ethanol in the state of São Paulo would drop by around 30% with direct sales.

There are also estimates that the concentration of production and distribution margins in the producer and increased competition between mill owners and distributors in the supply of fuel on the market could reduce – by up to 20 cents per liter – the prices of hydrous ethanol for the final consumer .