Re: brazil ethanol


<conradeaton@xxxxxxxxxxx> wrote in message
news:1136889297.879895.294390@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> Is this right??? It seems different from much of what I read here, but
> it is hard to doubt the WSJ.
> "After nearly three decades of work, Brazil has developed a
> cost-effective alternative to gasoline... (and ) expects to become
> energy independent this year (down from importing 80% in the 1970s--the
> U.S. imports about 60% currently)...Brazil can make ethanol from sugar
> cane for about $1 a gallon, according to the World Bank. That compares
> with the international price of gasoline of about $1.50 a gallon. Even
> though ethanol gets less mileage per gallon than gasoline, in Brazil
> it's still much cheaper per mile driven."
>
> "Using carbohydrates instead of fossil-fuels to run cars is not a new
> idea. Henry Ford's first car was made to run on ethanol...During World
> War II, the U.S...and other nations relied on ethanol to extend
> gasoline supplies. In the postwar period, gasoline was so plentiful and
> cheap that ethanol lost its allure.
>
> "India and China have sent a parade of top officials to see Brazil's
> program..."
>
> David Luhnow and Geraldo Samor, "As Brazil Fills Up on Ethanol, It
> Weans Off Energy Imports", The Wall Street Journal, Monday, January
> 9th, 2006, front page


I haven't seen or read the full article but by the sounds of it from what
you quoted, it would appear the article is rather misleading in a number of
ways.

The main reason Brazil has made major gains in energy self sufficiency since
the 1970's isn't because of ethanol. The main reason is Brazil has had some
very good luck compared to most countries in the area of conventional oil
exploration. Take a look at BP's Statistical Review for 2005 entries
regarding Brazil:

http://www.bp.com/downloads.do?categoryId=9003093&contentId=7005944

Between 1984 and 2004 it appears Brazil has increased their proven reserves
from 2 gigabarrels to something around 11.2 gigabarrels. Oil production has
similarly increased dramatically, from something like 693,000 barrels per
day in 1994 to 1,542,000 barrels per day in 2004.

As another poster pointed out, Brazil is also uniquely well situated to
exploit ethanol more so than most countries. Brazil is a large place,
almost a big as the US, but it has a significantly smaller population of
around 186 million versus the US's 296 million. Additionally, Brazil is a
middle income country, and consequently they have a very low per capita oil
consumption rate compared to fully industrialized countries like the US. If
you don't consume much oil to begin with, it isn't that hard to replace a
sizeable fraction of it with ethanol.

http://www.odci.gov/cia/publications/factbook/geos/br.html

As for the direct $1 (ethanol) to $1.50 (gasoline) comparison, I would say
this too is a bit misleading. The article did point out that the ethanol
has less energy content and gets less gas mileage, but there is more to
consider as well. In particular if ethanol costs $1/gallon, that probably
means it has a real manufacturing cost of something near $1/gallon.
Petroleum based gasoline has a real cost of production of practically
nothing, it is "free stuff" just sitting around in the ground waiting for us
to harvest. The fact that gasoline sells for $1.5/gallon doesn't mean it
had a real cost of production of nearly that much, it just means people are
willing to pay that much for it and someone is making a huge profit on it.
People aren't making huge profit on the ethanol. In other words... In
terms of producing real wealth for mankind, oil is a vastly superior
product. If it is even possible for the entire world to convert to pure
ethanol use, it would reduce the amount of real wealth available for humans
in general. On the whole, our standards of living would have to decline, at
least somewhat (everything else being equal, IE: no advances in other wealth
generating technology to compensate).


.

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