ETHANOL: LESS THAN MEETS THE GAS TANK

Advocates of energy independence cite Brazil as an example when calling for increased ethanol production mandates in the United States, but they often misrepresent or misunderstand the facts concerning Brazil\'s energy make-up, says D. Sean Shurtleff, a graduate student fellow with the National Center for Policy Analysis.

In August 2006, the Washington Post reported that ethanol in Brazil "has replaced about 40 percent of the country\'s gasoline consumption," a figure commonly cited by newspaper outlets. But this is misleading, as Energy Information Administration (EIA) data show:

* In 2006, ethanol made up about 48 percent of the fuel used by gasoline-powered passenger vehicles in Brazil.
* But including both gasoline-and-diesel-powered vehicles, ethanol supplied only 20 percent of the total fuel consumed by automobiles and trucks on Brazilian highways.

After the 1980s\' ethanol shortages, Brazil recognized that ethanol production alone would not lead to energy independence. Instead, it started promoting policies to boost domestic oil production. Indeed, increased production and new oil discoveries played the biggest role in liberating Brazil from dependence on foreign energy sources. According to the EIA:

* Brazil increased domestic crude oil production an average of more than 9 percent a year from 1980 to 2005, to 1.6 million barrels of oil per day.
* Most notably, in 2007, Brazil announced a huge oil discovery off its coast that could increase its 14.4 billion barrels of oil reserves by 5 billion to 8 billion barrels, or 40 percent.

By contrast, from 1980 to 2005, U.S. crude oil production fell an average of about 2 percent a year or 40 percent overall, from 8.6 million barrels of oil per day to 5.2 million.

Source: D. Sean Shurtleff, " Energy Independence in Brazil: Lessons for the United States," National Center for Policy Analysis, Brief Analysis No. 614, April 7, 2008.

For text: http://www.ncpa.org/pub/ba/ba614/