Brazilian Cars High on American Alcohol

Bertel Schmitt
by Bertel Schmitt

Around two thirds of the oil used in the United States is imported. Now, something is done to offset this energy trade imbalance ever so slightly: Ethanol, the stuff that is supposed to save the U.S. from foreign oil dependency is shipped out of the country.

Who buys it? Brazil, the land where cars drink alcohol to drive. Demand in Brazil is growing at a 5-10 percent annual pace. This year, bad weather has resulted in a poor harvest of sugar cane, the main raw material for Brazilian fuel.

Enter the American farmer and enterprising Japanese trading houses

Japanese trading company Itochu will be buying U.S. bioethanol and export it to Brazil. According to The Nikkei [sub], Itochu operates a bioethanol production and sales business in the northeastern Brazilian state of Tocantins and the southeastern state of Minas Gerais jointly with U.S. agribusiness giant Bunge Ltd. Soon, Brazilian cars will run on American corn.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Chuckrs Chuckrs on Sep 17, 2011

    So we can get rid of the subsidies, right? President Golfsalot can trade the stuff for Brazilian oil, discovered and developed with financing from the US. WSJ 08/18/2009 - US Ex-IM Bank plans lending to Petrobras.

    • See 7 previous
    • Moorewr Moorewr on Sep 17, 2011

      @Pch101 chruckrs: that's silly. I could quote the number of vacation days George W. Bush took per year v. Obama if it mattered - which it doesn't. Suffice to say it was rather a lot more, and neither for their many faults can be critiqued as being un-engaged with their jobs. I think that exhausts the topic of presidential golf, at least as it relates to cars.

  • Ixim Ixim on Sep 17, 2011

    Those US ethanol subsidies may be part of what makes this deal profitable. Of course, this makes a dent in the ongoing surplus of [subsidized] US-produced ethanol. I don't know about President Obama, but former President Bush was a big fan of ethanol. Hey, anything that may keep that stuff out of my gas

  • Hank Hank on Sep 17, 2011

    So what's the impact at the US pumps, since E10 rules the day, at least up here in the NE?

  • Marcelo de Vasconcellos Marcelo de Vasconcellos on Sep 17, 2011

    Bertel, Thoug weather is a factor, it's not the main one. Te main factor is sugar prices. Due to (among other things) relentless growth in consumption in both India and China, the international price is attractive to producers. So much so that they prefer to sell abroad. In spite of allsubsidies. Not to mention "promises" and "commitment" of producers and government to the Brazilian citizen. You see, for a myriad of reasons (funding for campaigns, "in-house" politicos, lavish spreading of money), the s-o-b sugarcane growers can and do get away with murder. Basically only in S. Paulo state (the main beneficiary and promoter of this underhanded scheme) is ethanol advantageous against gasoline. I for one, thoug I drive a fully flex fuel car have not filled up with ethanol for more than 2 years. However, as I'm ot in SPaulo it doesn't matter that I pay more than internaational prices for the shameless concotion they sell as gasoline to Brazilian consumers. Sad tropics.

    • Autobraz Autobraz on Sep 18, 2011

      If it makes you feel any better, Marcelo, this year Summer here in Vancouver lasted for about 1 month...