Brazil fights oil prices with alcohol

Brazilians aren't waiting for high-priced hybrid cars.

Drivers are fighting rising gasoline prices by buying "flex" or "flexible fuel" cars that slurp more alcohol.

Alcohol made from sugar cane is becoming the fuel of choice in Brazil, and other countries - so much so that global sugar prices hit a seven-year high this week.

Regular car engines will run fine on a 10 percent blend of alcohol and gasoline. But by using computer sensors that adjust to whatever mix is in the tank, flex car engines run on either ethanol, gasoline, or any combination of the two. And they have been roaring out of dealerships here since Volkswagen sold the first TotalFlex Golf in March 2003.

Today, flex cars are outselling traditional gasoline models. In August, 62 percent of new cars sold were flex, according to industry numbers. "Demand has been unbelievable," says Barry Engle, the new president of Ford Brasil. "I am hard-pressed to think of any other technology that has been such a success so quickly."

As many countries reexamine their dependence on petroleum fields for fuel, Brazil offers a model for how to make the switch to cane, beet, wheat, or corn fields. The successful transition here comes down to many factors, but price is the primary one, experts say.

Unlike hybrids sold in the US, for example, flex cars sold in Brazil don't cost any more than traditional models. In fact, some models are only available with flex engines now. Ethanol engines use 25 percent more ethanol per mile than gasoline. But ethanol (the alcohol produced by fermenting sugar) usually sells at somewhere between a third to half of the price of gas. Even people who were reluctant to take the plunge and buy a flex say they have been won over by the savings.

"It's been a revelation because of the economy," says Madalena Lira, a university lecturer who says that she and her husband had reluctantly purchased a flex car because it was the only available version of the Fiat Palio Weekend they wanted. "I love this car in spite of it being a flex, not because it is a flex. The savings have been great. I'd certainly buy another one."

In addition to the savings, environmentally conscious drivers appreciate having a car that runs on a cleaner fuel, and some might even buy a flex car because they know it is good for the country's auto and sugar manufacturers. But today, two-and-a-half years into the flex experiment, another unforeseen advantage is emerging.

"There is something curious that we are just starting to see," says Alfred Szwarc, an ethanol consultant with Sao Paulo's sugar cane association. "Gasoline powered cars lose more of their [resale] value than flex cars. People know that oil is finite and that it is going to get more and more expensive. They think that a gasoline-powered car is going to be more difficult to sell. They see flex cars as the car of the future."

Page: 1 | 2