Friday, May 23, 2008

That's Just Wrong

So Wrong

1 comment:

IceCreamMan said...

For the first time since I've been aware of gas prices, the price of gasoline in Brazil is similar to the price in the US.
And I suspect gasoline may soon be cheaper in Brazil than in the US. First, Brazil is completely independent of the rest of the world for petroleum. Additionally, with the massive new reserves recently discovered, there's a good chance Brazil will become a major petroleum exporter in the near future. Of course, those same reserves will force Brazil to increase its spending on the armed forces to defend against a US attack. I'm guessing the US will use the excuse of the FARC in Colombia. Any other bets?
But in addition to those factors directly related to petroleum, Brazil has a few other advantages that can affect the price of petroleum here. Specifically, natural gas and alcohol.
In the US, ethanol is not a viable automotive fuel because in the US, ethanol is made from corn. For each unit of energy spent to cultivate and process corn to make ethanol, the yield is between 0.7 and 1.3 units of energy, depending on which study you believe. In any case, if corn-based ethanol is actually energy-positive, it's only marginally so. In Brazil, ethanol is made from sugar cane. For each unit of energy spent cultivating and processing sugar cane to make alcohol, the yield is between 6 and 8 units. So ethanol is not only a viable fuel here, it's actually available just about everywhere. It's usually a lot cheaper than gasoline. And while one used to have to choose between an alcohol-burning engine and a gasoline-burning engine, now "flex power" engines that burn either or even mixtures are everywhere.
Also, Brazil has a much better natural gas infrastructure than the US at this point. Natural gas conversions are pretty common here. A car converted to run on natural gas burns gas from the natural gas tank (one usually loses space in the trunk or in the back of a pickup truck) until it runs out, at which point it switches over to its primary fuel - alcohol or gasoline. These conversions are pretty common now in São Paulo. Most taxis, for example, have natural gas tanks. Natural gas is both a lot cheaper and a lot cleaner than gasoline. And Brazil had already made a deal and built a natural gas pipeline to Bolívia, but then it was discovered that... you guessed it... Brazil also has massive reserves of natural gas.
With natural gas and ethanol as viable alternatives to hold down demand for gasoline, I can imagine petroleum prices being substantially lower in Brazil than in the US within another year or so.
Plus Brazil being a petroleum exporter will only hasten the fulfillment of the "B" part of the prediction that the economic powerhouses of the 21st century will be the BRICs (Brazil, Russia, India, and China).
I'm personally hoping this all somehow translates into higher demand for super-premium ice cream here.