Monday, March 16, 2009

Brazil Wants U.S. to Lift Ethanol Tarrifs

Flush with freshly discovered oil, already the world's largest exporter of ethanol, up and coming superstar, Brazil, wants the U.S. to lift its 53 cent a gallon tariff that safeguards its worthless corn-based ethanol:

Brazil's President Luiz Inacio Lula da Silva on Friday implored American businessmen to help convince the United States to lift the 53-cent-per-gallon import tariff it places on his country's ethanol fuel.

Speaking at a Wall Street Journal-sponsored investor forum Monday, Silva defended the gasoline alternative as a cheap and easy way to end dependence on foreign oil and help reduce global poverty.


But Silva, who met with President Barack Obama on Saturday, has made little progress persuading the U.S. to reduce the tariffs, which are in place to protect American farmers who make ethanol from corn. Brazil makes ethanol from sugar, in a process that is much more efficient and costs less.

"One thing that leaves me perplexed, is in the same world where we invest in environmental policy capable of avoiding global warming ... many countries still don't place any tariff on polluting fuels while they place absurd tariffs on ethanol," Silva said, pointing out the ethanol burns relatively cleanly compared to gasoline.

During the presidential elections, Obama supported subsidies for the Midwest-based ethanol industry.

That support is widely considered a factor in his victory at the Iowa cauceses which boosted his early prospects during the primary. It also contributed to his victory in the general elections against John McCain, who opposed the subsidies.

In Brazil, all gasoline is blended with 25 percent ethanol and so-called "flex-fuel" cars can run on either the gasoline-alcohol mix or pure ethanol available at about 35,000 filling stations across Brazil.

About 23 percent of Brazil's automotive fleet is now "flex-fuel."

Added note: oil from their super deep finds (20,000 feet below sea and ocean floor) should start squirting by May 1. Mark it on your calenders.

- Brewskie


  1. It's too bad that the corn lobby is so strong in the U.S. :(

  2. It really is. The subsidies are really a big hand out for fat corp. farms, and sclerotic ethanol producers. Producers have been hit especially hard under the recession; unfortunately, their cries may be getting the ear of the federal government, and it's currently demanding higher ethanol content.

    Second-generation biofuels such as cellulosic corn or algae may be much more promising, but this corn-based ethanol needs to get buried with the greedy AIG execs.

    I really hope the Obama administration heeds Brazil's call. Brazil really is an up-and-coming superstar, it's a leader in biofuels, it could strike oil in a fish bowl, it's loaded with natural resources and has an emerging economy. It's proximity in our global hemisphere is reason enough to open the trade doors; if not, China or India will be more than happy to open theirs.