A massive new fleet of vehicles that can run on ethanol alcohol produced from fermenting sugarcane, gas, or a mixture of the two called flex-fuel vehicles is holding gas prices that are escalating out of control around the world at 2005 prices in Brazil.  

These vehicles, which account for 20 percent of all vehicles in Brazil and 90 percent of new sales, has prevented state oil company Petrobras from charging more for gasoline despite record world oil prices, the company said Friday.

"It doesn't make sense hiking the price of gasoline abruptly if it will cause me a bigger loss of the market than what is already happening today," a Petrobras director told reporters. "It's possible that this year we'll sell more ethanol than gasoline in Brazil."

Unlike hybrids sold in the U.S., flex cars sold in Brazil cost the same as standard models.  In fact, many models only come as flex-cars. And although ethanol engines burn 25 percent more fuel per mile than gasoline, ethanol usually sells at somewhere between a third to half of the price of gas.  In a developing country with the sixth largest population in the world (201 million),  keeping fuel costs down is a major priority.

The flex-fuel trend took seed in 2002 and has grown quickly since.  But the program's origins trace to the early 1980's when Brazil's military government pushed the alcohol-powered vehicles to cut the country's reliance on foreign oil imports and help domestic sugar producers earn a better living.  The initiative required gas stations across the country to add ethanol pumps and between 1983 and 1988, over 88 percent of cars sold annually were running on an ethanol and gasoline medley.

At the close of the 1980's, the government withdrew the subsidies supporting the ethanol program and sugarcane farmers went back to selling sugar, which priced better as a commodity than ethanol.  Falling gas prices in the 1990's left little incentive to use the flex-fuel vehicles, although many taxi drivers continued to fill up with ethanol. 

In 2002, the Brazilian Congress passed a law requiring a blend of ethanol and gasoline at all stations.  It was enough to get car makers tinkering with flex-fuel vehicles once again, only this time market conditions - namely rising oil prices and a growing environmental movement - favored mass production.    

Like Brazil, the U.S. has tinkered with ethanol use for quite some time but without much success.  At present, there are 4 million cars in the U.S. than can run on a blend of up to 85% ethanol and gasoline, but few places offer the fuel.  At present, 10 states don't have a single ethanol or ethanol-gas mix pump and only 1500 such pumps exist around the country. 

The numbers show a lack of seriousness in our policies towards moving away from a petroleum economy.  If a developing country like Brazil could make the move in the 1980's, certainly the world's largest economy can today as well.  Although ethanol, a fuel which requires significant farm land to produce, is hardly a panacea for petroleum addiction, the substitution of the fuel serves as a clear role model for change.  The U.S. must look to and study Brazil's successes and failures in its own attempt to curtail reliance on gasoline. And while a transformation won't happen overnight, it will never happen without major legislation on Capital Hill to subsidize the evolution of our fuel to a completely renewable source.