Domestic Fuel

Brazil is considering a pipeline for ethanol, according to an Associated Press report out today. The $226 million pipeline “would run from the central state of Goias to a refinery in Paulinia, near Sao Paulo, through Brazil’s main producing centers of sugar cane and ethanol,” and would be built by the government’s Petroleo Brasileiro SA, or Petrobras. Brazil is the world’s largest producer of ethanol and the country is getting heavily into the export market. The article quotes Petrobras Chief Executive Sergio Gabrielli saying Petrobras would be pioneering a new area of alternative fuel transportation. “We are the only country in the world that has the technology to build an ethanol pipeline,” Gabrielli said. “To make the ethanol market grow is strategic for the world, not only for Brazil.” While exports have been limited as the country has been concentrating on its domestic market, they are exporting to or in talks with exporting to Venezuela, Nigeria, China, South Korea, India and the United States. There is currently a 54-cent-a-gallon duty on imports of ethanol to the United States, which is intended to offset the federal tax subsidy for the U.S. industry. There are concerns that Brazil might challenge that tariff under the World Trade Organization. There was a good article on that subject recently in the Des Moines Register.