Mines and Energy Minister Edison Lobao said Friday the Brazilian government wants state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, to act as the regulator of the domestic ethanol market in order to reduce pressure on prices.
Mines and Energy Minister Edison Lobao said Friday the Brazilian
government wants state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or
Petrobras, to act as the regulator of the domestic ethanol market in order to
reduce pressure on prices.
"Petrobras will now produce ethanol more intensively in order to be the
regulator of this market," said Lobao in a television interview. "I
asked Petrobras President Jose Sergio Gabrielli to do this two days ago."
The government's action comes amid a surge in ethanol prices.
The acceleration of ethanol prices is due to an inter-harvest shortage of
sugarcane, the raw material used in ethanol production.
In addition, a jump in global sugar prices has caused many mills to opt for
production of the sweetener rather than ethanol, further exacerbating the fuel
shortage.
"Ethanol output was cut because of the price of sugar. Mills are
preferring to produce sugar instead of ethanol," said Lobao.
According to Lobao, Petrobras will build ethanol stocks in order to avoid
shortages during the inter-harvest period.
Regarding gasoline, Lobao ruled out a hike in prices amid global market
volatility. The minister said that he expects prices to stabilize in the short
term.
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