Brazilian Cars High on American Alcohol
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.
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.
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.
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 tank.....lol.
So what's the impact at the US pumps, since E10 rules the day, at least up here in the NE?
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.