BRAZIL SHOWS OIL NOT ALCOHOL IS KEY TO ENERGY INDEPENDENCE

In recent years, analysts have touted Brazil as an example the United States should follow on the path to "energy independence." Brazil's success is often attributed to its thriving ethanol market, but this is, at best, only a small part of the story. Consider:

• Brazil uses much less gasoline and diesel than the United States; while Brazil consumes 20 billion gallons of ethanol, gasoline and diesel combined each year, the United States uses 182 billion gallons a year, or over 9 times as much.
• Brazil's climate is suited to growing sugarcane, which requires half as much land as corn per gallon of ethanol produced and it provides 800 percent more energy than the fossil fuel used to make it.

While Brazil's embrace of ethanol doesn't have much to teach the United States, its policies with regard to domestic oil and gas production do provide an instructive lesson, says Burnett. In the 1980s, despite huge subsidies Brazil began experiencing ethanol shortages. As a result, it started promoting policies to boost domestic oil production. Indeed, increased production and new oil discoveries played the biggest role in liberating Brazil from dependence on foreign energy:

Brazil increased domestic crude oil production an average of more than 9 percent a year from 1980 to 2005, [9% a year for 25 years] to 1.6 million barrels of oil per day. By contrast, from 1980 to 2005, U.S. crude oil production fell about 2 percent a year or 40 percent overall.

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