Biofuel Dynamics in Brazil: Ethanol–Gasoline Price Threshold Analysis for Consumer Preference

Letícia Rezende Mosquéra (), Matheus Noschang de Oliveira, Patricia Helena dos Santos Martins, Guilherme Dantas Bispo, Raquel Valadares Borges, André Luiz Marques Serrano, Fabiano Mezadre Pompermayer, Clovis Neumann, Vinícius Pereira Gonçalves () and Carlos Alberto Schuch Bork
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Letícia Rezende Mosquéra: Department of Economics, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Matheus Noschang de Oliveira: Department of Electrical Engineering, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Patricia Helena dos Santos Martins: Department of Economics, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Guilherme Dantas Bispo: Department of Electrical Engineering, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Raquel Valadares Borges: Department of Statistics, University of Brasília, Federal District, Brasilia 70910-900, Brazil
André Luiz Marques Serrano: Department of Electrical Engineering, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Fabiano Mezadre Pompermayer: Brazilian Institute for Applied Economic Research (Ipea), Brasilia 70076-900, Brazil
Clovis Neumann: Department of Electrical Engineering, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Vinícius Pereira Gonçalves: Department of Electrical Engineering, University of Brasília, Federal District, Brasilia 70910-900, Brazil
Carlos Alberto Schuch Bork: Brazilian National Confederation of Industry (CNI), Brasilia 70040-503, Brazil

Energies, 2024, vol. 17, issue 21, 1-25

Abstract: The global transition towards environmentally friendly energy sources plays a major role in addressing both energy security and climate change. Brazil is at the forefront of this transition due to its rich natural resources and increasing investments in biofuels. Therefore, this investigation examines the consumption patterns and interactions between ethanol, primarily sourced from sugarcane, and gasoline within Brazil’s energy framework. Ethanol’s renewability, reduced environmental impact, and superior combustion characteristics position it as a feasible substitute for traditional fossil fuels. Nonetheless, obstacles like competition for land use and inadequate distribution infrastructure impede its widespread acceptance. This study explores the economic interaction between ethanol and gasoline, focusing on pricing dynamics and regional influences. Using consumer preferences and the accessibility of ethanol, this research identifies a range of price ratios within which consumer preferences shift from gasoline to ethanol in various Brazilian regions. The study also classifies Brazilian states into three distinct ranges based on the ethanol-to-gasoline price ratio in 2023 for a granular analysis of the economic dynamics influencing fuel choice. The research identifies states with competitive and dominant ethanol markets by examining the interplay between ethanol market share, fuel prices, and the adoption of flex-fuel vehicles (FFVs) in the country. Lastly, the findings support the importance of regional economic conditions and the influence of price ratios on consumer behavior, highlighting that ethanol’s market share does not always correlate with favorable pricing.

Keywords: ethanol; gasoline; price ratio; threshold (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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