The drop in the price of ethanol is already being felt at the pumps at gas stations and, therefore, makes consumers question: is it more advantageous to fill up with alcohol or gasoline?

The price of ethanol had an accumulated drop of 6% in the last thirty days. According to the Oil National Agency, the supervisory body for industry activities, distribution and resale of petroleum derivatives and fuel alcohol, the national average per liter of fuel increased from R$5,10 to R$4,79. And further reductions in these values ​​are expected with the increase in the sugarcane harvest in Brazil. The values ​​of gasoline, on the other hand, have to do with the variation of the dollar.

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Gasoline prices also fell, but to a lesser extent. The most used fuel in Brazil had an average reduced from R$ 6 to R$ 67 within a month.

Now, to find out which is the best choice for the consumer's pocket when it comes to ethanol and gasoline, it is necessary to make a calculation about the price of both fuels.

Ethanol is 70% as efficient as gasoline, so what you have to do is divide its value by that of gasoline. If the result is greater than 0,7, it means that alcohol is costing more than 70% of the price of gasoline. So it's not worth it. However, if the result of the division is less than 0,7, then it is more interesting to consume ethanol.

It turns out that considering the average value of ethanol and gasoline, the second fuel is more advantageous. See in the table below the average prices of five states already with the 70% calculations.

Sugarcane harvest should recover in 2022 and thus help to further reduce the price of ethanol

Sugarcane production, the raw material for ethanol fuel, should recover in 2022/2023. The sugarcane harvest begins on April XNUMXst of this year.

The projection is from the Center for Advanced Studies in Applied Economics (Cepea), in a positive expectation of a more favorable climate and greater productivity of Brazilian sugarcane fields, compared to the 2021/2022 season, which ends on March 31.

Therefore, if the expectations of a favorable climate at the beginning of 2022 come to pass, there will be an increase in the production of sugar and mainly ethanol, with more supply.

According to the Luiz de Queiroz College of Agriculture at the University of São Paulo, the 22/23 sugarcane harvest should reach values ​​between 530 million and 578 million.

In the last harvest, sugarcane production varied between 516 million and 520 million tons registered by the National Supply Company (CONAB) and by the Sugarcane Industry Union (ÚNICA).

The relationship of the price of gasoline and the dollar

As we saw above, the price of gasoline dropped in some states. However, the value remains at a high level, after several readjustments in recent months. And all of this has to do with the dollar price.

Understanding the relationship between the US currency and the price of gasoline here in Brazil is simple. Since 2016, Petrobras has adopted the so-called Import Parity Price Policy (PPI), which bases the value of a barrel of oil in dollars.

Therefore, when the dollar is high, the price of a barrel of oil also rises. And this is felt by the consumer directly at the gas station pump.