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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 422.21

+1.9%

Jan 12 4:00 PM EST

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To: Seeker of Truth who wrote (424)	9/13/2005 6:01:20 AM
From: elmatador	Read Replies (1) of 219285

The devils is in the details. Before we go to the details we have to remove a whole curtain of smoke. We are talking about the least transparent business in the world. S. Paulo state area 250.000km2 produces the bulk of ethanol in Brazil. The stats are here: unica.com.br But we have to look to the figues under the light of what happens in Brazil, the role of Sao Paulo state, taxation, Petrobras countermeausures... Two types of users: 22% ethanol is always mixed with gasoline 100% ethanol powered cars Petrobras (the state-owned oil company) played with the gasoline prices to make ethanol unattractive. As a result, if you you'd buy a powered car powered by 100% ethanol you'd risk finding gasoline cheaper. You'd be stuck. If you have a huge fleet of cras that owuld hurt. To circumvent that, the carmakers produced flex-fuel cars. Fuel with whatever is cheaper. That because Petrobras couldn't not keep artificial lower prices forever: Petrobas drops the price? you fill with gasoline. Petrobras jacks up the price? you fill with ethanol.. As you can see in the stats, S. Paulo state produces the bulk of ethanol in Brazil. Taxation explains that: Gasoline (or anything considered energy) in Brazil is taxed where it is consumed. Sao Paulo state convinced Brasilia -don't ask how- that ethanol is not energy and is taxed in the origin where it is produced. They sell ethanol everywhere in Brazil and the state keeps the taxes. NOTE: S. Paulo doesn't produce oil (Rio de Janero state offshore basin does). This is a big incentive for other states produce ethanol and they are starting to produce ethanol. You can produce sugar and later tranform it ethanol. So depending on the prices in the international market you can profit for whichever is more attractive. This also have a flutuation effect in what is counted as sugar or ethanol over a period of time. Sao Paulo's sugar production has been rein in by the federal government to give chance for other states' production because the state is more efficient. This is the laying field. I still have to explain the potential of ramping up ethanol.

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