Chile Eyes Cheaper Fuels with Ethanol-Gasoline Blend Amid Fiscal Strains

Chile is considering adopting an ethanol-gasoline blend to reduce fuel costs as soaring oil prices strain the economy and government finances. According to a memo prepared by energy ministry officials, shifting to E10 ethanol blending, mixing 10% ethanol with gasoline, could cut government fuel supply costs by approximately $107 million annually.

The move would help phase out MTBE, an octane-boosting gasoline additive currently used in Chile. The country lacks significant domestic production and relies on imports for 85% of its gasoline supply, mostly from the US. A switch to ethanol could benefit corn growers, but it also 'replaces one import dependency with another.'

The energy ministry has drafted a proposal for the transition, which would require State oil company ENAP to invest around $10.8 million to adapt refining, terminal and storage infrastructure. The transition could be introduced gradually and partly offset by lower carbon-tax payments.