Ethanol Price Surges, Reaching Nearly R$ 7 at Gas Stations; Reduction Promises to Arrive in the Coming Weeks to Ease Consumer Burden

Gasoline And Ethanol Prices Skyrocket Every Day At Gas Stations And Hit Consumers’ Pockets Hard, Who Have Nowhere To Run

The price of ethanol continues to rise at gas stations across Brazil, reaching almost R$ 7 in the Southern region of the country, reveals a survey carried out by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), between the 1st and the 21st of this month. According to Mario Campos, president of Siamig, the reduction will reach the pumps in the coming weeks and relieve consumers’ pockets.

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The average price of ethanol has reached up to R$ 5.999 in the Southeastern region, causing despair among consumers. According to the president of the Sugar-Ethanol Industries Association of Minas Gerais (Siamig), alcohol prices skyrocketed due to the drought that occurred last summer.

“Production did not come consistently, and therefore there was a supply and demand problem that caused ethanol prices to rise,” explained Mario Campos.

With the sugarcane harvest period and ethanol production usually occurring between April and December, the price of the biofuel should be low, but that is not what consumers are seeing at gas stations.

The Value Of The Biofuel Is Expected To Fall In The Coming Weeks And Alleviate Consumers’ Pockets

Despite the spike in ethanol prices, the executive notes that there has been production — albeit lower than in previous years — and thus prices should decrease soon at gas stations, alleviating consumers’ pockets.

“The reduction will reach the pumps in the next few weeks in markets where ethanol is more competitive, such as São Paulo, Paraná, and Minas Gerais. However, price parity with gasoline is expected to be less common due to the smaller harvest,” he stated.

Mario Campos explains that the primary culprit for the rise in biofuel prices is not just the drought during the Brazilian summer, but the spike in sugar prices in the international market also contributed to the appreciation of ethanol. In other words, with high prices abroad, mills prefer to export sugar rather than produce ethanol.

According to the Foreign Trade Secretariat (Secex), in April, Brazil exported 1.904 million tons of sugars and molasses, 25.67% more than in the same month in 2020, when a total of 1.515 million tons was shipped.

Direct Sale Of Ethanol From Mills Approved By The CCJ Promises To Stimulate Competition And Curb The Rise In Gasoline Prices At Gas Stations

On May 5th, the Commission of Constitution and Justice (CCJ) of the Chamber of Deputies approved the permission for the direct sale of ethanol from mills — without going through distributors, to gas stations. The new measure could curb the rise in gasoline and diesel prices and relieve Brazilians’ pockets.

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

There are also estimates that the concentration of production and distribution margins in the producer and the increase in competition among millers and distributors in the fuel market could reduce hydrated ethanol prices by up to 20 cents per liter for the final consumer.

Gasoline, Alcohol, And Diesel Prices Keep Rising, And Deputies Refuse To Change ICMS Amidst The Surge In Fuel Prices 

Petrobras is being ‘attacked’ by the surge in fuel prices by deputies who refuse to change the ICMS amid the crisis caused by consecutive increases in gasoline, ethanol, and diesel prices.

Brazilians are suffering daily from rising fuel prices, given that ethanol, gasoline, and diesel prices keep climbing at the pumps. As a measure to try to curb the spikes, the Government proposed changes to the ICMS taxation on fuels. The new proposal was not well received by some deputies, who went as far as accusing the Brazilian oil company Petrobras of being the cause of it all.