Over 90% of all cars made in Brazil nowadays are “flex total,” which means they can run on sugarcane-based ethanol or gasoline, or any combination of the two. But the economically smart thing to do in most of the country at this moment is fill up with good old gasoline. The reason is what is known as an ”energy density” difference between ethanol and gasoline of 30% – you just go 30% further with gasoline than with ethanol (get 30% more energy). In practical terms, that means you buy ethanol only when it is at least 30% cheaper than gasoline.
With an average price increase of almost 3% in the last 30 days, ethanol is a good buy in only 12 states at this time (there are 26 states, plus the Federal District, in Brazil). According to the National Petroleum Agency (“ANP”), those states where it pays to fill up with ethanol are: Bahia, Ceará, Goiás, Maranhão, Mato Grosso, Mato Grosso do Sul, Paraná, Pernambuco, Rio de Janeiro, Rondônia, São Paulo and Tocantins. In Mato Grosso, ethanol costs 58.4% the price of gasoline. However, in states far from ethanol production and mills it is clearly uneconomical. In Roraima the cost of a liter of ethanol is 82.5% the cost of a liter of gasoline and in Acre 80.2%.
Even so, ethanol is almost 17% cheaper than it was in February just before this year’s harvest began. Prices of ethanol tend to rise during the period between the end of one harvest season and the beginning of the next. Brazil is now coming up on the end of this year’s sugarcane harvest season.