Brazil fights oil prices with alcohol

Ethanol-powered cars are not new in Brazil. In a bid to cut the country's reliance on foreign oil imports and help their own sugar producers, Brazil's military government pushed alcohol-powered cars in the early 1980s. Gas stations across the country added ethanol pumps to the existing gasoline and diesel ones. Between 1983 and 1988 more than 88 percent of cars sold annually were running on a blend of ethanol and gasoline.

This didn't last for long, though. The subsidies were withdrawn at the end of the decade, and cane farmers quickly realized they could get more from selling sugar than turning it into ethanol. When alcohol fuel shortages ensued it looked like the end of the road for ethanol engines as sales of the experimental cars plummeted.

That experience may have been a bitter one but it gave Brazilians a taste for alternative fuels that lingered. Although most people abandoned ethanol cars, many taxi drivers kept them because it was so much cheaper than a gas-only car. Then the country's Congress passed a law forcing oil companies to add small quantities of ethanol to their gasoline. That prompted car companies to experiment with an engine that would run on both fuels, and when they did, the flex car sales took off.

"Why did this take off here?" asks Mr. Engle. "Because this isn't brand-new. Car buyers concerned about high gas prices or potential ethanol shortages no longer have to make a choice between the two. It used to be an either-or but now there's both and that gives consumers peace of mind and explains why Brazilians have embraced it."

The next task is convincing other nations to adopt the technology, industry experts said. With oil prices at a record high, there is a clear advantage to diluting gasoline or even substituting it, with sugar-based ethanol or one of the biofuel alternatives such as beets or corn.

For most countries, the problem is the lack of ethanol production and a distribution system. Although many countries require oil companies to dilute their gasoline with ethanol (in Brazil, gas sold at the pumps is 25 percent ethanol; and some of the gas sold in the US, China, Australia and Canada is 10-15 percent ethanol), few actually make ethanol or manufacture flex vehicles, and even fewer have a network of gas stations with ethanol pumps.

In the US - with about 4 million flex cars - there are 14 states without even one ethanol pump, says Robert White, project director for the National Ethanol Vehicle Coalition.

With years of experience at every stage of the process, Brazil is in the pole position to help other nations' farmers grow crops, scientists refine it into fuel, or engineers produce the technology to make flex cars, says Rogelio Golfarb, president of Brazil's car makers association. "There is an enormous demand from abroad to know more," Mr. Golfarb says "This is an advantage and an opportunity for Brazil."

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