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The Efficiency of Producing Alcohol for Energy in Brazil: Reply

We are pleased that Jonathan Wight has called attention to recent developments in the Brazilian National Alcohol Program (Proilcool). In the 3 years since our paper was written, real world oil prices declined more than 20%, the world recession and interest rate shocks depreciated the fundamental dollar/cruzeiro exchange rate, world sugar prices rose substantially and then declined to nearly record lows, more than 1.5 million alcohol-powered cars were sold in Brazil, and the country's alcohol production doubled. In view of these changes, we can begin to assess whether it was economically rational for policymakers to have encouraged so strongly the sale of alcohol-powered cars and the production of alcohol at autonomous distilleries.'