Brazil's Government Gives Subsidy for Ethanol, Fuel Price to Fall
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Brazil's government has approved a subsidy for ethanol producers, a move expected to lower fuel prices for drivers.
As a result of the subsidy, ethanol prices at the pump should fall by at least 1.5%. Ethanol is a fuel made mainly from sugarcane and is widely used in Brazilian cars, often as an alternative to gasoline.
At the same time, lawmakers are discussing a separate plan to reduce the price of diesel, a fuel used in trucks, buses, and heavy machinery.
Members of Brazil's Congress have presented 37 amendments to a provisional measure, which is a type of law that takes effect quickly but must later be approved by Congress. This measure aims to make diesel cheaper for consumers and businesses.
The discussion around diesel comes after Petrobras, Brazil's state-controlled oil company, raised the diesel price by 1 real. Petrobras plays a major role in setting fuel prices across the country.
However, some analysts question whether this increase truly reflects the real cost of producing and selling diesel. They point to what is called a defasagem, or lag, meaning the local price still does not match international market prices.
This lag can create problems for Petrobras and for the government, since prices that are too low compared to costs may lead to financial losses or supply issues later on.
Overall, the government appears to be using different strategies for two major fuels: a direct subsidy for ethanol and a legislative measure for diesel. Both actions aim to ease the cost of fuel for Brazilian consumers, though the diesel debate remains ongoing as lawmakers negotiate the final terms of the measure.
Vocabulary6 words
- subsidy
- money given by the government to lower a price
- diesel
- a fuel used mainly in trucks and buses
- amendments
- changes proposed to a law before it is approved
- provisional measure
- a law that works right away but needs later approval
- analysts
- people who study data to give expert opinions
- defasagem
- a gap between local and real market prices
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Quiz
Answer key
1. Prices will fall by at least 1.5% 2. To reduce diesel prices 3. No, they see the lag as persistent
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Fill-in-the-blank listening
Play the audio again and fill in the missing words as you listen.
Brazil's government has approved a _____ for ethanol producers, a move expected to lower fuel prices for drivers.
As a result of the subsidy, ethanol prices at the pump should fall by at least _____.
At the same time, lawmakers are discussing a separate plan to reduce the price of _____.
Members of Brazil's Congress have presented _____ amendments to a provisional measure.
This measure aims to make diesel cheaper for _____ and businesses.
The discussion around diesel comes after _____, Brazil's state-controlled oil company, raised the diesel price by 1 real.
Some _____ question whether this increase truly reflects the real cost of producing and selling diesel.
They point to what is called a _____, meaning the local price still does not match international market prices.
Discussion questions
- Do you think fuel subsidies are a good way to help consumers? Why or why not?
- How might lower ethanol prices affect drivers and the environment in Brazil?
- Why do you think the government chose different approaches for ethanol and diesel?
- What problems could arise if fuel prices stay lower than production costs for a long time?
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