IndyCar racing season gets underway - 2nd year running on ethanol. Brazilian giant Petrobras may move into ethanol production.

The all-ethanol IndyCar racing season got underway yesterday at Homestead speedway in south Florida. As some of you may know the IndyCar series last year adopted ethanol as its fuel.

The shift to ethanol appears to have gone without a hitch (click here to see my story last year), and ethanol continues to be the fuel of choice this season. The ethanol industry's new IndyCar slogan this year is "Burns cleaner, burns rubber." I notice the industry has now cleverly switched from referring to ethanol "blended" fuel to ethanol "enriched" fuel, which has a more positive sound to it.

The ethanol industry is also sponsoring one of the teams again this year, with a car driven by Ryan Hunter-Reay. (see photo below of team ethanol's car being prepared for Saturday's race - the car finished a respectable 7th out of a field of 25)

I went along to Homestead to meet a marketing team representing Petrobras, the Brazilian fuel giant, which is using the IndyCar series to promote "the ethanol experience," as well as the company's position as the world's largest distributor of ethanol. "We use this as a nice showcase of what ethanol can do," said Carlos Lua Cintra Mauro of the Foster Marketing Group. "Motor racing is very exciting, so it's a good way to promote ethanol." Cintra Mauro knows a thing or two about racing. He was the manager of three-time Formula One champion Nelson Piquet, from Brazil. He's also knowledgeable about ethanol, recognizing that it is not the perfect solution, though a very useful energy alternative "if you do it properly." Like others he sees ethanol as a complementary part to the larger energy matrix. "The ideas isn't to completely substitute oil," he said. "The world has grown too hungry for energy for one solution to be the only solution."

Ricardo Largman, another marketing consultant with Brazilian company, Newsday, pointed out that Brazil and the United States, the world's largest ethanol producing countries, can benefit by sharing their biofuels experience. Brazil has the advantage with its large sugar cane production, which is a far more efficient source of ethanol than US corn. Brazil also has a large amount of available land (which Ricardo points out does not include the Amazon which is not apt for sugar cane farming due to its excessive rainfall). But the US spends far more on research and development. "Research is something the US spends ten times more than Brazil on," said Largman. He said the US spends about $1.5 billion on biofuels research, compared to only $150 million in Brazil. "It's about joining forces between the two biggest ethanol producers in the world," he said.

(click here for my two stories about the sugar-cane ethanol revolution in Brazil and the development of flex-fuel cars)

Largman and Cintra Mauro also say that Petrobras is preparing to launch its own biofuels production company in May. Until now Petrobras has limited itself to oil and gas production, as well as biofuels distribution and transportation. The new company, as yet unnamed, will also be investing in other forms of alternative energy, including wind and solar. I haven't been able to find any confirmation of this, although Petrobras officials did announce earlier this year they were seriously looking at going into ethanol production. (click here for more)

- David Adams

Comments

[TheSUBWAY.com]

We found an interesting article about the problems with Ethanol on ConsumerReports.org:

http://blogs.consumerreports.org/cars/2008/03/ethanol-e85.html

"But there are some problems with increasing ethanol blends. Ethanol contains less energy than gasoline, so increasing the amount of ethanol in gasoline will likely result in lower fuel economy. Increasing standard fuel blends from zero to 10 percent ethanol, as is happening today, has little or no impact on fuel economy. In tests, the differences occur within the margin of error, about 0.5 percent. Further increasing ethanol levels to 20 percent reduces fuel economy between 1 and 3 percent, according to testing by the DOE and General Motors. Evaluations are underway to determine if E20 will burn effectively in today's engines without impacting reliability and longevity, and also assessing potential impact on fuel economy."

TheSUBWAY.com would like to invite readers to post their own views and ideas in TheSUBWAY.com's Investor Forum:

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[StockPromoter07]

It's good to hear BP & GM talk about alternative fuels, but 50 years to implement is too long.

http://money.cnn.com/2008/03/05/news/companies/bigoil_hydrogen/index.htm

Perhaps this link will spark more attention:

http://www.chevrolet.com/electriccar/

It is GM's electric concept car the Chevy Volt. If more people begin to demand alternative fuel cars, we should be able to speed the rate at which the technology is developed.

We have started an Investor Forum where Investors can meet and discuss topics like this:

http://investor-forum.thesubway.com/