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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Letícia Rezende Mosquéra & Matheus Noschang de Oliveira & Patricia Helena dos Santos Martins & Guilherme Dantas Bispo & Raquel Valadares Borges & André Luiz Marques Serrano & Fabiano Mezadre Pompermay, 2024. "Biofuel Dynamics in Brazil: Ethanol–Gasoline Price Threshold Analysis for Consumer Preference," Energies, MDPI, vol. 17(21), pages 1-25, October.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:21:p:5265-:d:1504521
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    References listed on IDEAS

    as
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