According to the Brazilian “Economic Value News”, on April 28th, Brazilian President Rousseff approved an interim measure to convert ethanol from a derivative of general agricultural products into a strategic energy source. The measure also provides that the proportion of ethanol added to gasoline will be reduced from 25% to 18%. According to this measure, the control of ethanol will be transferred to the hands of the National Petroleum Administration, so it will regulate the private stocks of ethanol and market supply and demand.

President Rousseff also instructed Petrobras to accelerate its investment in ethanol production to meet the needs of the domestic market and the international market. The Brazilian government believes that in the next 10 years, it will need to invest R$ 15 billion a year to meet the demand of domestic and foreign markets for sugarcane ethanol. Due to insufficient ethanol production, its price rose to a level comparable to that of gasoline, thus weakening the competitiveness of dual-fuel vehicles.

President Rousseff also analyzed the possibility of imposing a 4% surcharge on sugar exports. She accused sugar producers of being more affected by rising international sugar prices and would rather produce more sugar while neglecting ethanol production. Some experts commented that the price of sugar exceeds the price of ethanol by 75%.

For the Brazilian federal government, it is very important to curb rising ethanol prices. It releases a signal that the government controls inflation.

In another development, because the United States' self-produced ethanol is not enough for its domestic market, it has suspended the ban on ethanol exports from Brazil to the United States.

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