Ethanol or gasoline? Consumer choice in the face of different fuel pricing systems in Brazil and Sweden

Abstract

In the context of high biofuel blends and flex-fuel fleets, consumers are faced with variations in the attractiveness of high-ethanol blends (E85 and E100), which depend, among other factors, on the different price mechanisms applied to gasoline. This research article examines scenarios in which different levels of oscillation in oil prices are transmitted to final gasoline markets in Brazil, influencing the attractiveness of ethanol to consumers. Our analysis suggests that the consumer might prefer more constant price advantages (e.g., in Brazil), while reacting negatively to very volatile markets (e.g., in Sweden). Since consumers apparently use more biofuels in a context of less price volatility, price stability might be an important aspect for policy makers to consider when designing policies to promote biofuel markets.

Ethical conduct of research

The authors state that they have obtained appropriate institutional review board approval or have followed the principles outlined in the Declaration of Helsinki for all human or animal experimental investigations.

In addition, for investigations involving human subjects, informed consent has been obtained from the participants involved.

Acknowledgements

The authors would like to thank Matti Parikka (Swedish Energy Agency), Arnaldo Walter (University of Campinas), Adriana Perez (Fundação Getúlio Vargas), Armin Wagner (German Technical Cooperation Agency) and Göran Lindell (Swedish Petroleum Institute) for their helpful insights during the development of the work.

Financial & competing interests disclosure

The authors would like to thank the Swedish Energy Agency and the European–Brazilian Network for Academic Exchange (EUBRANEX) for the financial support provided for the research reported in this paper. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed. No writing assistance was utilized in the production of this manuscript.