As global oil markets have trembled amid the Iran conflict, Brazil has been partly shielded by a decades-old fuel setup that gives many drivers a choice at the pump. Tens of millions of motorists can fill with 100% sugarcane-based ethanol or with gasoline blended with 30% biofuel, a flexibility that has helped keep gasoline costs from rising as sharply as they have elsewhere, according to reporting on the program.
Brazil’s protection comes from the scale of its “dual-fuel” fleet, made up of vehicles able to run on combinations of ethanol and gasoline. The initiative began in 1975 during Brazil’s military dictatorship and later expanded and endured through democratic administrations, positioning the country to reduce dependence on imported oil.
In the fifth week of the Iran conflict involving Iran, the United States and Israel, analysts and officials say that energy-security discussions have increasingly turned to Brazil’s approach. The country’s model is being watched as a possible blueprint by nations including India and Mexico, with interest focused on how Brazil built fuel choice into everyday transportation instead of treating biofuels as a niche alternative.
While consumers worldwide have faced steep price increases, Brazil’s gasoline market has shown less volatility. Reporting on the program said Brazilian gasoline prices rose just 5% in March, compared with 30% in the United States, and it credited that relative stability in part to a mature domestic biofuels industry that can absorb geopolitical shocks with a lower risk of fuel shortages.
“Brazil is much better prepared than most countries because it has a viable alternative of this nature,” Evandro Gussi, president of the Brazilian Sugarcane Industry Association (UNICA), said in comments included in the report. The timing also matters domestically: Brazil’s next sugarcane harvest is expected to start in the first half of April and to yield a record 30 billion liters of ethanol, 4 billion more than last year, which UNICA’s Gussi said is equivalent to the total gasoline Brazil imported over all of last year.
Even with ethanol playing a central role, Brazil still imports some refined fuels to meet demand, and it sources petroleum from places including the United States, Saudi Arabia, Russia and neighboring Guyana. The country’s reliance on imported crude underscores why fuel blending can reduce price exposure for motorists but does not remove the broader link between international oil prices and domestic energy economics.
The ethanol market is deeply tied to the economy around São Paulo, the report said, describing production as a mix of large export-oriented operations and smaller family farms. It also pointed to research networks supported by the state, including the Science Development Center for Ethanol at Unicamp in Campinas, where coordinator Luis Cortez said Brazil’s system has advantages across production, engines and fuel-blending rules.
Cortez said that Brazil has flexibility in “ethanol production,” in “vehicle engines,” and through federal government setting of the ethanol percentage in gasoline blends, adding that investment in research ultimately shows up at gas stations. At the same time, the report noted that while biofuels generally emit less carbon dioxide when burned than diesel, oil and gas, whether they are overall more sustainable remains an open question because land-use changes and production methods can offset some emissions benefits.
The diesel side of the market has been more exposed to global disruptions, the report said, because diesel is primarily made from imported crude and includes a smaller biofuel component than gasoline. It cited that biodiesel, largely made from soybeans, makes up about 14% of the diesel blend, and that it would need to rise toward the 30% used in gasoline blends by around 2030 to match that fuel-mix flexibility, assuming research and technology improvements.
As a result, diesel prices have become a political and economic pressure point. The report said Brazil’s diesel prices surged by more than 20% in March, prompting President Luiz Inácio Lula da Silva to propose import subsidies through May. Government estimates in the reporting also described diesel procurement as running about 20% to 30% each month, largely sourced from Russia, and said Brazil imported nearly 17 billion liters of diesel last year.
With Lula seeking reelection in October, stabilizing diesel prices is described as important to prevent truck driver strikes and to help keep food inflation in check. The report also said UNICA’s Gussi has discussed Brazil’s biofuels industry with heads of state since the conflict started, including Mexican President Claudia Sheinbaum, who earlier in the month said she is interested in Petrobras’ technology in producing ethanol from agave, a plant she said is popular in Mexico.