This is what President Bush should do to bring down $55-a-barrel oil prices, solve the Middle Eastern crisis, shrug off Venezuela President Hugo Chavez’s daily tirades against “U.S. imperialism” and make all Americans happier: Follow Brazil’s example.
No, I’m not talking about making friends with oil-rich dictators, or shutting down the country for a whole week to celebrate Carnival (although, come to think of it, the latter wouldn’t be a bad idea). I’m talking about Brazil’s successful reduction of its foreign oil dependence through the development of alternative fuels.
The issue was brought to my attention in a recent interview with Sao Paulo Gov. Geraldo Alckmin, a possible contender for the 2006 presidential elections, who said 50 percent of all new cars sold in Brazil this year will be “mix-fuel,” or able to use a combination of gasoline and ethanol.
“It’s already a reality,” Alckmin said. “And in four years, virtually all new cars in the country will be mix-fuel.”
Brazil’s reliance on oil imports has plummeted from 85 percent of its energy consumption in 1978 to 10 percent in 2002, according to that country’s National Petroleum Agency. And this year, it will be nearly zero, Brazilian officials say.
Granted, ethanol already is used in U.S. Midwestern states, although in small quantities, as an additive. But Brazil has done something more radical: It pressed car makers to modify engines, so they can run on much higher percentages of ethanol.
Brazil’s program started three decades ago with a government program to mix gasoline with sugar-based ethanol. Problem was, many car engines had trouble starting on the ethanol-mixed gasoline. In 1979, when oil prices soared, Brazil poured more money into research, and began producing ethanol-only cars.
Today, nearly 20 percent of Brazil’s cars run on ethanol only, in addition to the 50 percent of new cars that have “mix-fuel” ethanol-and-oil engines.
In addition, Brazil is beginning to use biodiesel — diesel made out of vegetable oils — for its trucks and buses. Last week, Brazilian President Luiz Inacio Lula da Silva dedicated a biodiesel plant in Minas Gerais state, which will produce 12 million liters a year of this fuel.
“We are telling the world that it is absolutely possible to produce fuel from renewable resources,” Lula said at the dedication ceremony. The plant will produce fuel made from sunflower oil, soybeans and African palm. Peasants who sell these products to diesel refineries will get tax breaks ranging from 32 percent to 100 percent.
As part of its plan, Brazil wants to sell its ethanol to the United States, arguing that it’s cheaper than U.S. corn-made ethanol.
“The United States would have a lot to gain by exporting its corn to Asia for human or animal consumption, and importing our ethanol for fuel,” Brazil’s Ambassador Roberto Abdenur says. “We could be of great help to reduce the U.S. dependence on foreign oil.”
U.S. oil experts say it will be a hard sell. The U.S. government subsidizes U.S. corn producers, who would be up in arms if Washington lifts barriers to Brazilian ethanol. Also, the Bush administration’s pet alternative fuel program is based on hydrogen, rather than ethanol.
Be patient, U.S. officials say. If oil prices continue rising, sales of hybrid cars — powered by electricity and oil — will boom. And the Bush administration has asked Congress for $360 million for its “Freedomcar” hydrogen-powered-car research program in 2006.
My conclusion: I don’t know whether U.S. cars should be running on ethanol, hydrogen, electricity or something else. But what’s pretty clear to me is that Bush’s current policy of spending $80 billion a year in Iraq while only $360 million for “Freedomcar” is absurd.
Why not impose a 10 percent tax on the purchase of gas-guzzling SUVs, and a 50 percent tax on Hummers? And, also, why not punish Detroit automakers that put out inefficient cars?
If Bush did that, the United States would no longer live in fear of oil-rich tyrants, be they in Saudi Arabia or Venezuela. Oil prices would go down, and the air we breathe would be cleaner. It can be done — just look at Brazil.
Reach Mr. Oppenheimer at email@example.com