Rio de Janeiro – The oil and ethanol price hike should limit global economic growth throughout the current decade. This is one of the main conclusions of study Sustainable Brazil – Oil, Ethanol and Gas Market Outlook, conducted by the Getulio Vargas Foundation in partnership with the auditing and consulting firm Ernst & Young Terco.
Ethanol prices, for instance, should more than double until 2020. The study points to a “latent mismatch between the growth of demand and the incorporation of new reserves, which should cause worldwide oil and ethanol prices to climb by 43.1% and 125.9%, respectively, until the end of the decade.”
However, this increase should not reflect on the Brazilian market as intensely. The study forecasts that the average increase in fuel prices in Brazil should be lower, at 18.7% and 7%, respectively, for oil and ethanol, until 2020.
“Even though the country will not be as affected by this trend, rising prices will be a limiting factor on the development of virtually all economies, translating itself into a hiatus 0.52 percentage point a year in relation to the potential growth of the world Gross Domestic Product (GDP) until the end of the decade.”
According to FGV, the study was based on a computational model of energy markets worldwide. Based on that model, the study concludes that in the current decade, the global scenario will also be marked by oil dependence, whose demand will keep growing, by tentative and insufficient models of substitution and energy efficiency, and an uncertain growth in supply, concentrating in the period after 2015.
to the coordinator of FGV Projetos (FGV Projects), Fernando Blumenschin, these factors will cause oil prices to hike before the end of the year. “From 2017 onward, the trend will start to lose steam as a result of gradual entry into operation of new reserves, and as substitution and energy efficiency measures start working.”
*Translated by Gabriel Pomerancblum
