It used to be a bad thing to put sugar in a gas tank. Vengeance seekers have long thought that surreptitiously dumping household sugar into someone's fuel supply would eventually lead to engine seizure. It turns out, because of built-in filters, the much sought-after jamming of a car's gizmos is less likely than pranksters believe.
That's not to say that sugar in the fuel supply is a thing of the past. In some places, in fact, sugar is the fuel supply.
Brazil, the world's fifth-largest country, now claims energy independence as the result of developing the sugar cane ethanol market. The Brazilian government kick-started the fledgling sugar cane industry to crank out ethanol in the wake of the ‘70s oil crisis and mandated sweeping changes to wean the country from foreign oil. Passenger cars had to be built to run on ethanol which led to the installation of a nationwide distribution network supplying ethanol in all service stations. Now imported fuel feedstocks are balanced with exports, taking OPEC out of Brazil's energy equation.
According to recent World Bank stats, Brazil's ethanol is about 30 percent less expensive than gasoline. Though ethanol gets slightly less mileage, it's still cheaper on a per-mile-driven basis.
"The way we figure it, ethanol will be cheaper than gasoline as long as the price of oil is over $45 a barrel," said William Bernquist, coordinator for research and development at the Sugar Cane Technology Institute in Piracicaba, Brazil. Given OPEC's manifest willingness to defend a $60-per-barrel price floor, it looks like ethanol's future as a cheap fuel alternative is secure.
We looked at the corn-based ethanol program in the U.S.("Fill ‘er Up With Corn, Please") and saw how food price inflation developed as an unintended consequence.
What about Brazil's program? Has the vast consumption of cane caused world sugar prices to skyrocket?
Simply put, no.
Despite youngsters' protestations to the contrary, sugar is not a staple. The corn used to make their breakfast cereals, however, is. Just look how much maize is consumed in the manufacture of Mexican tortillas. Demand for corn as food is pretty much inelastic.
Corn-derived ethanol's growth has much wider-ranging agricultural implications than that of sugar cane ethanol. Aside from human food use, corn is an animal feed. Competition for corn translates into higher prices for animal products like beef, chicken, eggs and dairy goods.
As a foodstuff, there are alternatives for cane sugar. Sugar beets, for example, account for about half of domestic U.S. sugar production.
Import demand for sugar, too, has actually fallen as production rises in developing nations that have been traditional importers. Coupled with that, consumption in developed countries is falling because of low population growth and dietary concerns.
Sugar is less demanding as an ethanol feedstock as well. Corn-derived ethanol has a net energy balance of 1.3 - meaning every gallon produced yields a third of a gallon of net energy. Ethanol made from sugar cane has a net energy balance between 8.3 and 10.2 according to recent research.
So it seems there's more than enough of the sweet stuff to go ‘round.
Unless some masked avenger starts sugaring our gas tanks, of course...
Via: SeekingAlpha| by Brad Zigler
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