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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (83073)	4/16/2007 4:38:34 AM
From: elmatador	Read Replies (1) \| Respond to of 206209

The Brazilian liquid fuels market. It was a good example. I appreciate that. The prices are distorted because Petrobras –state-owned monopoly) decided to kill ethanol dropping artificially the price of gasoline. They want all the big fleets (post office distributors, taxis) to render their new fleet of 100% ethanol vehicles useless since price of gasoline didn’t follow the international market. The car industry realized that and created the flex fuel vehicles. If Petrobras tried to drop artificially the price of gasoline consumer will easily use the cheaper fuel. But now Petrobras is 40% privately owned and they can’t play freely the political wayo pricing. Three factors opened the way for Ethanol: hyper-inflationary ended, opening of the economy and removal of the monopoly and partial privatization of Petrobras. All markets coming out of controlled economy and opening up, need to price according to the market. Only pricing history, AFTER, opening of the economy can be correctly assessed. Note that the Diesel price is also distorted and paid for by the cross-subsidization, i.e., gasoline consumer pay part of the costs of the fuel transport companies’ use. That’s why we need to produce bio-diesel since $1.7bn is spent on its imports. That’s why we see granite and cement being transported by road rather than by ships along the coast or by train. The removal of the barriers of most closed economy outside of the Soviet Union –that used to benefit those guys similar to the Mexicans you mentioned- will point to a more easily evaluated economic aspects.