In its newly launched public relations campaign, the Brazilian ethanol industry (UNICA) is making exaggerated and in some cases false claims about the benefits of its product over American ethanol.

Most glaringly, Brazil asserts its product is always cheaper than that of the U.S. This is simply not true. A comparison of recent ethanol prices clearly shows that E10 (10 percent ethanol/90 percent gasoline) made with American ethanol would be 7 cents less at the retail level than E10 made with imported Brazilian ethanol.

In the analysis below (which the RFA attempted to post on UNICA’s new website unsuccessfully and shared with Brazilian representatives) the RFA’s Vice President of Research Geoff Cooper identifies key inconsistencies and falsehoods in Brazil’s claim to be a cheaper alternative.

UNICA suggests that, “Sugarcane ethanol is the most affordable renewable fuel currently produced in large quantities.” A quick comparison of recent prices for American and Brazilian ethanol (including data provided by UNICA members themselves via the CEPEA agreement) proves the statement just isn’t true. UNICA, in making such a statement, engages in a number of instances of “fuzzy math,” including:

• First, it appears to compare spot prices for Brazilian ethanol to futures prices for corn ethanol. U.S. ethanol futures are lightly traded and futures prices are nearly always higher than prices paid on the spot market, which is the way the lion’s share of U.S. corn ethanol is traded. This presents an obvious apples-to-oranges comparison on prices.

• Second, UNICA admittedly ignores ethanol transportation costs in its deceptive calculations. The cost of shipping ethanol from point of origin to the point where it is blended with gasoline is reflected in the price the consumer ultimately pays. In the notes under the table, UNICA acknowledges that U.S. ethanol enjoys at least a $0.05/gallon advantage over Brazilian sugarcane ethanol when it comes to transporting ethanol from point of origin to New York Harbor. The transportation cost advantage is likely more pronounced than UNICA admits.

• Third, and most deceiving of all, UNICA completely ignores ethanol prices for 2009 and 2010. The table comparing Brazilian sugarcane ethanol prices to U.S. corn ethanol prices conveniently ends with 2008 prices and skips the most recent 16 months of ethanol pricing. UNICA obviously avoided using 2009 and 2010 data because it would have clearly showed that U.S. corn ethanol has been a more attractive and cost competitive option for gasoline blenders during that time.

“The back-of-the-napkin price comparisons on the “Economic Advantages” section of UNICA’s new web site are quite deceptive and disingenuous,” Cooper said. “By omitting the last 16 months of ethanol pricing data, UNICA is providing readers with the false sense that Brazilian cane ethanol is always cheaper than U.S. grain ethanol. As real data from the market clearly shows, U.S. corn ethanol has been considerably cheaper than Brazilian ethanol for most of the last year – a fact UNICA has apparently intentionally ignored.”

Using its calculations based on outdated prices, UNICA claims U.S. drivers would save “about a nickel per gallon” if they filled up with E10 made from Brazilian ethanol rather than U.S. corn ethanol. Yet data from Brazil’s CEPEA, the Center of Advanced Studies in Applied Economics (collected via an agreement with UNICA and another sugarcane growers association) clearly shows that Brazilian ethanol prices have not been competitive with U.S. corn ethanol since the summer of 2009. The truth is, an American driver who pulled up to the pump today would theoretically spend an additional 7 cents per gallon if he filled up E10 from imported Brazilian ethanol instead of E10 from American ethanol.