Mac Margolis at BloombergView has a good analysis of Brazil’s ethanol industry, which details how “clever sugar and ethanol makers” have been hamstrung by the country’s bureaucracy.
Some 60 ethanol plants have shuttered this year alone and “blue slips,” Brazil’s unemployment notices, are multiplying: Nearly half of the more than 36,000 industrial jobs erased last month were in the sugar and alcohol industry, reports Valor Economico.
What’s worse, they are victims of the wonks and activist bureaucrats whose good intentions to goose growth and contain inflation have only compounded their troubles. The road to ruin was paved by the government of President Dilma Rousseff, a micro-manager who converted state-run companies into the useful idiots of misguided economics.
The piece notes that ethanol took a back seat to oil after the discovery of a huge cache of oil was found under four miles of sea, sediment and salt in 2007.
To restore the balance, and guard against the volatility of oil prices, Brazil might increase the proportion of ethanol blended into gasoline, as well as increase a gasoline tax.
That won’t make Brazilians happy: They already pay one of every three reais they earn to government. But with pressure on emerging market nations to fight climate change by slashing greenhouse gas emissions, a levy on dirty fuels in favor of cleaner-burning ethanol might draw more sympathy.