A sugar cane shortage in April caused Brazil's ethanol prices to soar, rising 65 percent to $6.31 a gallon or more than double what it was the year before. Since Brazil blends its gasoline with a mandated 25 percent ethanol, the rising cost of the biofuel directly affects pump prices. Even though the U.S. stepped in to assist by shipping some 200 million liters (52.8 million gallons) of ethanol to Brazil, the biofuel shortage has continued to worsen in the South American nation.

Brazilian officials are now reportedly considering a reduction in the mandatory amount of ethanol mixed into gasoline. Brazil's agriculture minister, Wagner Rossi, has proposed slashing the ethanol content in gas from the current level of 25 percent down to 18 percent. This, according to Rossi, would ease the strain on sugar cane growers and limit Brazil's need for imported ethanol. A final decision on the move to E18 should come within the next couple of weeks.

[Source: Bloomberg | Image: cliff1006 – C.C. License 2.0]

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