Brazil Mulls Using More Biodiesel to Avoid Fuel Shortage

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June 10, 2022

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by Rachel Gamarski and Tatiana Freitas (Bloomberg/Financial Post) Brazil’s government is mulling an increase later this year in the amount of biodiesel blended into trucking fuel to avoid shortages. — Latin America’s largest economy may boost the biodiesel blend to 15% from 10% if stockpiles of diesel remain at low levels during the second half of the year, according to people with direct knowledge of the matter, who asked to not be named because the discussion isn’t public. The increase would be in place for a limited time, one of the people said.

Using more biodiesel would actually increase fuel prices, as biodiesel is more expensive than the petroleum-based fuel. Diesel prices are already at record levels due to tighter global supply amid sanctions on Russia following its invasion of Ukraine. The higher blend would help maintain stockpiles at a time when there’s a higher risk that supply from the US is curbed due to hurricanes in the Gulf of Mexico.

Brazilian President Jair Bolsonaro has been working on proposals to ensure fuel supplies with a minimal impact on prices as the nation struggles amid high inflation as he eyes re-election in October. Blending more biodiesel would require more soybeans to be crushed in Brazil rather than exported, tightening supply and threatening to worsen rampant food inflation. READ MORE

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