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 The Brazilian government is declaring victory in its decades-long struggle to become self-sufficient in the supply of oil. The milestone is cause for celebration in a country that has long paid a high price for imported energy.
It will also reverberate here in the United States where policy-makers, too, are trying to wean the nation from costly imports, jittery markets and the foreign spigot. But we must learn the right lessons. Brazil's success came not from treating oil as an addiction but by producing even more of the stuff and by becoming even more dependent on world markets. Here in the United States, most attention to Brazil's fuel supply has focused on the country's aggressive program to replace oil with ethanol that is made by fermenting homegrown sugar. American newspapers are filled with stories about Brazil's famous "flex fuel" vehicles that make it easy to switch between ethanol and conventional gasoline. Guided partly by Brazil's apparent success, American policy-makers are crafting new mandates for ethanol, and flex fuel vehicles are now taking shape. We have the impression that ethanol is king. In reality, ethanol is a minor player in Brazilian energy supply. It accounts for less than one-tenth of all the country's energy liquids. The real source of Brazil's self-sufficiency is the country's extraordinary success in producing more oil. After the 1970s oil shocks, when Brazil's fuel import bill soared, the government pushed Petrobras, the state-controlled oil company, to look asunder for new energy sources. Petrobras delivered, especially at home, where the firm pioneered the technologies that make it possible to extract oil locked in sediments under the seabed in extremely deep water. In the middle 1970s Brazil struggled to produce just 180,000 barrels of oil per day while importing four times that amount. Today it produces about 2 million and is self-sufficient. Indeed, the current milestone of self-sufficiency arrives with the inauguration of Brazil's newest deep water platform, the P50. When P50 reaches its full output later this year, that one platform will deliver more liquid to Brazil than the country's entire ethanol program. Brazil's self-sufficiency offers three lessons for U.S. energy policy: * First is that ethanol, with current technology, will do little to sever our dependence on imported energy. Today's approach involves growing a crop - sugar in Brazil, corn in the United States - and then fermenting the fruits to yield fuel. Sugar plants in Brazil's climate are a lot more efficient at converting sunlight to biomass than is corn in the Midwest, but U.S. policy nonetheless favors corn (and imposes tariffs on imported sugar) because the program is really a scheme to deliver heartland votes rather than a commercially viable fuel. Yet, even with Brazil's favorable climate and sugar's inviting biology, ethanol is already reaching the limit. That's because the land and other resources devoted to ethanol can be put to other uses such as growing food and cash crops. Indeed, today the Brazilian government is actually reducing the share of ethanol that must be blended into gasoline because sugar growers prefer to make even more money by selling their product as sugar on the world market rather than fermenting it into alcohol. New technologies - notably "cellulosic biomass" - could breathe fresh life into ethanol and replace still more oil. Cellulosic biomass is intriguing because it cuts costs by allowing the entire plant - the cellulose in the stalks, as well as the prized grain or sugar - to be fermented into fuel. Advocates for this technology, including President Bush in his State of the Union address, have wrongly confused the sexy promise of this newfangled approach to making ethanol with the practical realities of fuel markets. Schemes to produce cellulosic biomass, today, work only under special circumstances and nobody has delivered the fuel at the industrial scale that would be required for the technology to become commercially viable. * Second, we should learn that, for now, the greatest force to loosen the world's oil markets lies with oil itself. We can use oil more efficiently, as would occur with a gasoline tax or wise fuel economy standards. But we can also find ways to produce more of the stuff - as Brazil did with Petrobras. The problem for U.S. policy-makers is that the richest veins for new production lie mainly outside the United States and beyond our direct control. Indeed, the Brazilian government made Petrobras more efficient by putting the firm partly beyond its control as well. When the government sold part of the company on international stock exchanges, it accepted Western accounting procedures and other strictures that have given Petrobras the autonomy and accountability to its shareholders that, in turn, helped make it an efficient company. We have a stake in seeing other countries do the same - from Algeria to Mexico to Iran and even Russia. But we must remember that Brazil did this on its own, in response to internal pressures for reform, with little leverage from foreign governments. * Third, we should learn from Brazil not to confuse the goal of greater self-sufficiency with the illusion of independence. Even as Brazil has become self-sufficient it has also, ironically, become more dependent on world markets. That's because the Brazilian government has wisely relaxed price controls so that the prices of fuels within the country are set to the world market. Thus Brazilians see real world prices when they fill up at the pump, and the decisions about which cars to buy and how much to drive reflect real costs and benefits of the fuel they consume. That is why, even as the country becomes self-sufficient, Brazilians are working ever harder to be more frugal with oil - because the price at the pump is high and rising. Dependence on oil is a liability that must be managed. But it is not an addiction. Efficiency, sober policies toward modest alternatives such as ethanol, and more production - all tools of the manager, not the addict - are required. Brazil helps show the way, but only if we learn the right lessons. This article appeared originally in the Houston Chronicle - www.chron.com.
Victor is director of the Program on Energy and Sustainable Development at Stanford University and adjunct senior fellow at the Council on Foreign Relations, where he directs research on energy policy. His email for contact:
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On the other hand, for sugar cane in Brazil, 40 % or more is manually harvested by sugar cane cutters, paid poorly and often under slavery statute.
In Sao Paulo, many farmers are transferring cattles to the North because they are loosing money. the same is happening for Soya farmers.
They have big expansion plan for their ethanol. Sao Paulo Land farms are rented to large sugar agribusinesses for a minimum of 4 years and they are getting good rents, instead of loosing money with Soya and catlles.
This means that the numbers of slaves can only go up and not down.
To get a better image from the world, Brazil will say how this ethanol industry is creating new jobs by the hundreds of thousands and they will call them the "green workers* when in reality they will be the new "green slaves".
Nothing to be proud of, but Brazil will copntinue to hide the sad reality.
Now that soya is no longer the fashion crop, they accuse (with the greens NGO'S) the Cargill, Bunge, ADM of being responsible for the slavery.
Once again, one has to realize that no such company have slaves. All the slaves are hired and (not really) paid by the large brazilian farmers and no one else.
As usual and once more, Brazil must find a foreigner to name as guilty of their own decision.
They never do nothing wrong. when things are bright it is because they are smart, and when things are bad it is because of external factors, including their poverty, while at the same time Brazil is recognized to have the world worst wealth inequality.
This means that their minority elite top which belongs their politicians, are pocketing all the wealth of the country but then they accuse the rich nations for their 80 % of population being poor.
Brazil was always badly managed since the last 100 years. It is not without reason they are nicknamed a boom and bust economy. this time they even failed to have a real boom during Lula mandate. They are at the queue of the economic growth of all developing countries.Numbers are published.
Their only boom was exports, but not because they were smart but only because there was external demand in the world recovery.
during the last 3 years their exports increased by about 60 to 80 % but their overall annual economic growth was an anemic (for developing countries)
3 % or so !
Nothing to be proud of either.
they have no long term plans longer than 3 years.
3 years ago their golden oil was Soya, 2 years ago it was Soya, now it is Ethanol.
IN these 3 years they have not invested in infrastructure in roads and railways, and now they wake up with projects. Projects that no one knows if and when they will be realized.
Lula is so smart that he freed 350 millions Reais to fill all the potholes in Brazil within 6 months.
On the other hand, they double a 600 kms highways near Bahia at a cost of Reais 12 billions that is supposed to take years. Quite a contradiction in the costs. All specialistzs said that the money freed to fill the potholes will not even cover the gravel and the sand costs, and will last only until the next heavy rains.
Is this a serious country, where political corruption is all the time the major pass time of their politicians ?
Really I dont think so.
Brazil is alsmostz suffcient in oil, they produce a lot of ethanol, but curiously their fuel pump prices is higher than the USA or most S.A. countries.
Knowing that agriculture is heavily energy dependants for tractors, combines, fertilizers and transportation they dont realize that with their progblems in roads paved and unpaved, thea are no longer competitive in agriculture. Their farmers are struggling, cannot repay their debts, and even less their already low subsidized rates, that the government is providing more subsidizes. On the other hand they are against the agriculture subsidizes of the rich nations, while they themselves subsidizes with low rates from the BNDES ALL their export industries without willing to open more their doors on industrial goods and financial services.
But at the same time they are forcing their Mercosur Partner, Argentina, for a FTA on auto parts. Strange isnt it !
Finally Brazil wants a always complain for the low price of their agricultral products but on the other hand they are not willing to pay the international market prices of Bolivian natural gas. they are actually paying 50 % below world market prices.
Has Brazil a one way view on trade ?
It is confirmed daily !
they are already highly profitable in trade with all the rich nations but they want more, ever more. The EU can produce most of its needed agriculture, well before Brazil.
But we have to reduce cotton and sugar beets production to please Brazil. We have no desire to eat GM Soy but we are forced to eat GM soy.
Isnt that funny to be forced to buy something we dont want to eat !
Really strange ! Really strange !