Ministry of Agriculture, Livestock and Food Supply - Embrapa

Figure1. International price of the petroleum barrel.
Source: Drawn by D. Gazzoni with primary data from DEA/USA.
increasing prices. It is perfectly logical, at the present time, to draw scenarios
with bottom-line quotes of US$ 100.00/barrel beginning in the next decade.
Under the present technology and price conditions parity between the taxfree
prices of alcohol and gasoline varies from US$ 30.00 to US$ 35.00. Since
bioenergy technology has yet to attain maturity, it is estimated that parity will only
be achieved when the petroleum barrel price is US$ 60.00 in the case of biofuels
derived from vegetable oil (Figure 2). Nevertheless, like fuel ethanol, whose
production cost has dropped by more than 60% along the last 30 years, biodiesel
production costs should decrease as technological breakthroughs are
implemented, gains in scale are achieved, production factor management is
mastered, and the market matures.
Since most international petroleum price scenarios foresee a continuous
price escalation, the prospects of the fuel ethanol program are strengthened not
only at the domestic level, but also internationally, creating the necessary leverage
for the biodiesel program.
The world is growing increasingly afraid of the negative impact of fossil
fuels on the climate, particularly because of the recent phenomena in Europe, the
USA and Asia, which have experience much more rigorous weather conditions,
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