Brazil gets Oil

Brazil has finally gotten itself a very big oil rig. With the price of oil rising every day, the country is understandably pleased to finally have enough production to cover its consumption. The last time oil prices peaked, back in the 70's, Brazil was pushed to the edge of bankruptcy in trying to afford its oil imports (see this article from Mercury News). Now, however, the the new rig is expected to even produce a little more than Brazil uses. It couldn't come at a better time, considering the delicate position of global oil supplies.

Petrobras, the oil company responsible for the rig, is playing it carefully. Having spent quite a few years developing deep-sea drilling technology, it's certainly going to see that time investment pay off. Still, it says it isn't going to pass the current high prices of oil on to its customers. Which doesn't quite jive...one of the reasons Petrobras worked so hard to find oil was because relaxed price controls in the country meant oil prices reflect demand.

Now that Brazil has it's own oil, though, it will be able to control its prices a bit more than before. It also means that their ethanol program--held up as a good example for the US to model itself on--is going to lose some of its prestige. It may not fall by the wayside entirely, but it is an alternate fuel. And once you don't have to worry about your primary fuel source, you don't have to push the alternative.