Another one in the eye for the "peak oil" fruitcakes

As you will see from the news excerpt below, Brazil is now filling up its motorists' cars with ethanol for HALF the cost of petrol (gasoline). Most calculations of ethanol costs that you see are based on the insane American system of producing ethanol from corn sugar. In Brazil, ethanol production is fully integrated, with the sugarcane going straight from the farm to the distillery -- thus VASTLY lowering costs. The distillery just puts the cane through a crusher and then immediately starts fermenting the squeezed-out juice.

The only thing holding up investment in ethanol production elsewhere is uncertainty about which way the oil price will go -- and since that depends mainly on how much the Saudis decide to pump, the price could easily lapse right back, as it has done in the past.

"In the past 18 months, sugar's future prospects have taken a dramatic turn for the better. Ironically, high oil prices – which have also pushed up canegrowers' and millers' costs – have been a major catalyst.

Brazil, the world's biggest sugar exporter – which in the early years of this decade was able to make a living at prices that all but brought Australian producers to their knees, because of its efficiency, low labor costs and a very low currency – has begun to divert much more of its sugar crop than in the past to ethanol production.

Brazilian sales of so-called "flex-fuel" cars, which can run on any blend of ethanol and petrol, and even 100 per cent ethanol, have soared this year. Ethanol gives somewhat less mileage to the litre but costs about half the price of petrol, and Brazilian car makers have taken to flex-fuel vehicles with gusto.


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