Argentina is considering hiking biofuel blends in diesel and gasoline as low agriculture commodity prices make them competitive at a time of high crude prices, creating the possibility of reduced prices at the pump, Energy Minister Javier Iguacel said Wednesday.
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Sign Up With a decline in corn and soybean prices over the past few weeks and a rise in crude prices over the past year, "biodiesel and ethanol have started to be competitive," Iguacel said in a press conference Wednesday. "We are seeing what to do about it."
He added that he has held talks with his counterpart in agriculture, Luis Etchevehere, about the necessary steps to take.
Argentina has a 12% blend requirement for biodiesel in diesel, and 10% for ethanol in gasoline. Biofuel makers have been pressing for higher blends -- around 20% -- to put slack capacity online and expand output.
The biodiesel industry, for example, has an estimated 1.5 million mt of capacity offline, given that a hike in US import duties has made it economically inviable to ship to what had been Argentina's biggest export market.
REDUCING PUMP PRICES
Iguacel said higher biofuel blends would help consumers by lowering retail diesel and gasoline prices.
While he said Argentina has some of the lowest pump prices in South America, the prices have risen this year on a rise in Brent ICE -- the international benchmark price followed in Argentina -- and a 48% depreciation of the peso against the dollar. A 30% inflation rate is also weighing on prices and curbing demand.
Biodiesel prices for refiners rose 36% in the first half of 2018, while ethanol prices increased between 15% and 24%, according to Energy Ministry data.
