Ethanol goes from BRL 6 at pumps in the city of SP

Whoever supplies gas stations in the city of São Paulo is seeing fuel prices soar. A liter of ethanol, which was once synonymous with economy fuel, costs an average of R$ 5.157 at retailers in the city, but can be found at R$ 6.199 in an establishment in Barra Funda (western zone).

According to a survey by the ANP (National Agency for Petroleum, Gas and Biofuels), the lowest value calculated for the fuel, which is derived from sugarcane, is R$ 4.499. Data were collected between October 31st and November 6th, and were released this Monday (8).

Gasoline, on the other hand, which suffers the impacts of the rise in the dollar and oil on the foreign market, and has been weighing on consumers’ pockets since the beginning of the year, is sold for R$ 6,348, on average, at gas stations in the capital. The lowest value calculated was R$ 5.799, reaching R$ 7.399 in establishments in the center.

See fuel prices

Weekly survey between October 31st and November 6th

_{Source: ANP (National Oil, Gas and Biofuels Agency)}

Unica (Sugarcane Industry Union) justifies that the increase in the price of ethanol is caused by the restriction in the supply of processed cane. The entity estimates a 15% drop in the 2021/2022 harvests compared to 2020/2021 due to weather conditions (drought and frost), with a great impact on São Paulo, the largest producer state.

“In this harvest, we should have a reduction of up to 3 billion liters in the volume of ethanol produced. In this scenario of retraction, the production of hydrous ethanol [tipo utilizado para abastecer os veículos] may have a reduction greater than this index”, explains Unica in a note.

Monthly survey by Cepea (Center for Advanced Studies in Applied Economics), from Esalq/USP, shows that the price of hydrated ethanol at mills was 8.2% more expensive at mills in October compared to September.

“Uncertainties regarding the consequences of the crop failure due to climate issues and the longer off-season period than in previous years continue to affect the sector,” says the study.

An example is that with the effects of drought and frosts, the crushing of sugarcane could end a month ahead of schedule in the Center-South regions of the country.

“Thus, with less raw material to be processed and low productivity per hectare, the off-season period [período entre o fim de uma safra e o início da próxima] it must be longer than in previous years”, says Ivelise Rasera Bragato Calcidoni, a researcher at Cepea.

To combat the rise in fuel prices, Confaz (National Council for Finance Policy) approved on Friday (29) the 90-day freeze on the value of ICMS (Tax on Circulation of Goods and Services) charged on fuel sales.

In Congress, the bill that alters the calculation of the ICMS (Tax on the Circulation of Goods and Services) on fuels was approved. Under the proposal, the price of a liter of gasoline could fall 8% at the pumps, while ethanol could be up to 7% cheaper.