Thursday, January 15, 2009

Ethanol is Bad Investment: Just Ask Brazil

We always seem to hear about the potential and value of ethanol at a viable source of fuel for our vehicles. But let's look at Brazil, which is looked to as an example of ethanol success.

Some excerpts from a recent article on the cost of ethanol versus gasoline:

"Here’s an alternative fuels word problem that might baffle even the best U.S. math students:

"Jose drives his black flex-fuel Toyota Corolla into a Esso station on Rua Henrique Schaumann, a busy thoroughfare in Sao Paulo. He sees that gas costs 2.60 Brazilian reais per liter and ethanol costs 1.55 reais per liter. If Jose wants to get the most mileage for his money, which fuel should he choose?

"But for Brazilians, especially the millions who drive flex-fuel cars that run on any mixture of gasoline and ethanol, that question is a breeze.

“'Here’s the rule of thumb,' said Jose himself, full name Jose De Luca, a 30-year-old industrial engineer. 'When the price is 70 percent or less the price of gas, it’s worth using ethanol.'

"He’s got the right idea, says Adriano Pires, an economist and director of the energy consulting firm Centro Brasileiro de Infra Estrutura. According to Pires, the 70 percent figure is generally accepted as correct, although it can vary slightly depending on a car's make and model."

All the talk of options and choices is fine, but as you can see from a country that is the leader in doing it, gasoline is still by far the most productive and effective fuel available.

With estimates of oil shale in the U.S. being 5 times the amount of known reserves in Saudi Arabia, we aren't anywhere near the myth of "peak oil" thrown around by those who have a stake in providing of alternatives or the price of oil going up.


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