The spatio-temporal dynamics of ethanol/gasoline price ratio in Brazil

We use an innovative method to analyze the spatio-temporal evolution of the ethanol/gasoline price ratio to end consumers in Brazil. This model allows estimating the distribution of prices throughout the country using a continuous space model estimated by Bayesian methods. We use data from the National Petroleum, Natural Gas and Biofuels Agency's price survey system, a weekly sample of 10% of fuel suppliers in Brazil, to estimate continuous projections of the price ratio for the entire country for the 2007-2014 period. We use this model to build an indicator of ethanol advantage in the country and show how this advantage has declined since 2009.