Natural gas vehicles in Brazil: consequences to fuel markets

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Pessoa, João Paulo Cordeiro de Noronha
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This Master Thesis consists of one empirical article on the field of Microeconomy. Natural Gas Vehicles (NGVs) are very popular in many countries around the world, including Brazil. The Brazilian State of Rio de Janeiro has the largest NGV fleet of the country. Using a panel database extending for 15 years, we evaluate the impact of the NGV fleet penetration growth in Rio de Janeiro on the retailers’s prices and margins of gasoline and sugarcane ethanol. By correcting for endogeneity, we are able to identify a negative impact of the former variables on the last ones. The result is generally robust to different specifications of our model and instrument, as well as to data adjustment. We also calculate that the NGV fleet growth has benefited the environment through lower pollutant emissions. Hence, the increase in the NGV fleet is benefitial to society not only through less polution, but also by lowering the prices of gasoline and ethanol, therefore benefiting its consumers.

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