Panama Embraces Ethanol to Ease Oil Dependancy

Snapshot of a service station announcing the sale of gasoline mixed with ethanol in Panama City. It is the first time in the history of the country ethanol has been used as automotive fuel. Photo by ©Omar Upegui R.

In order to reduce dependence on petroleum products, Panama has developed a national policy on biofuels.  These laws establish the country’s national policy to promote, encourage, and develop the production and use of biofuels as well as the generation and cogeneration electricity from local biomass. Using ethanol as an oxygenate additive in fuel could inject nearly $100 million into Panama’s economy as well as generate 75,000 new jobs.

Panama shows promising potential for sugarcane-based production of ethanol and palm oil to produce biodiesel. Ethanol production from sugarcane is a great investment alternative for major domestic sugarcane growers as are investments in palm oil plantations for future biodiesel projects. The soils in Panama offer numerous extensions available to grow these plantations.

Starting Sunday, September 1,  2013, anhydrous ethanol was  added to gasoline in Panama.  It was a historic event.  Panamanians have mixed feeling about consuming ethanol together with gasoline.  Some are all for it, whereas others are hesitant in using the new gasoline known as E5, since there are rumors out there claiming that older cars will have carburetor problems. Older cars and vintage cars designed to use a slower burning fuel should have their valves upgraded or replaced.

E5 is being marketed only in Panama City, the capital city of this small nation in Central America.  One hundred and forty-nine service stations had their installations ready to fill the automobiles’ tank with E5.  One of them was the gas station a few blocks from our house.  (See the image above).  By early next year the rest of the country will be supplied with ethanol according to a government official.

The current prices of E5 (95 percent gasoline and 5 percent ethanol) are:

  • Regular gasoline (91 octane):  $4.03 per U.S. gallon
  • Super gasoline (95 octane):  $4.27 per U.S gallon

Ethanol is produced by Campos de Pesé, a Panamanian-Nicaraguan venture which own sugar cane plantations in the Province of Herrera.  Approximately 10,000 acres of sugar cane are presently available to produce ethanol which will yield 12 million liters of ethanol this year.  Next year, the production of ethanol is expected to escalate to approximately 40 million liters.

According to Panama’s biofuel mandate, the percentage added to 91 and 95 octane gas will be increased approximately 2 percent in yearly intervals until the maximum of 10 percent is reached in 2016.

Serious efforts are being made in Panama to ease oil dependency.  Several hydroelectric plants are being built and 88 gigantic wind mills are being installed in Penonomé (eolic energy)—even as we speak—to generate electricity for rural areas of the country.  The production of ethanol is another alternative to ease oil imports as we explained earlier.

Panama has the cheapest gasoline in Central America.  For example, a gallon of super gasoline in Costa Rica can be had for $5.16, compared with $4.27 a gallon in Panama.  That is a significant difference of $0.89 cents per gallon which represents a painful pinch to the family budget.

Consumers in Costa Rica, during the week of December 30 thru January 5, paid $ 5.16 for a gallon of super gasoline, $ 4.98 for regular gasoline and $ 4.80 for light diesel oil; while in El Salvador, the price at the pump was $ 4.07 a gallon for super gasoline, $ 3.85 for regular gasoline and $ 4.11 for light diesel oil.

According to a recent study prepared for the region of Central America, fuel prices increased during same period in Guatemala.  The fuel prices here are not regulated by the government.  They are adjusted weekly by the free market based on the trend of international prices.

The situation is very similar in Nicaragua, where prices are also not regulated by the government. They are determined by each individual oil company operating in the country, and adjusted on a weekly basis.

President Ricardo Martinelli promised “El Cambio” in Panama during his political campaign.  He certainly wasn’t “talking the talk”.  The guy meant every word he said.  There have not been so many and considerable  “cambios” in this country since Belisario Porras who served three terms as President of Panama soon after its independence from Colombia, (e.g., 1912-1916, 1918, and 1920-1924).  Good Day.

6 thoughts on “Panama Embraces Ethanol to Ease Oil Dependancy”

  1. Never mind carburetors. Try engines. I have a letter from Toyota telling me in writing that if I put one drop of E15 in my tank, all warranties are voided. They aren’t the only manufacturer to make such a move.

    Even the E10 is a bad idea. For one thing, the diversion of so many crops to fuel has only raised the price of corn and brought more shortages. Beyond that, genetically modified corn is being used for ethanol production, and there’s no way to prevent the GMO corn from affecting other fields.

    Can you tell I’m not a fan?😉

  2. Morning Linda:

    Hummm, interesting! In Panama, automobile companies have officially claimed their cars will have no problem using E5 and will back this claim with an official warranty in writing. People here were calmly buying E5 at the pump stations when I drove out to monitor the situation near our house.

    I own a Toyota Corolla 2006 and my tank is now full with super gasoline. My next visit to the pump will be on September 20th. I’m crossing my fingers, that everything is clear by that date. There’s nothing we can do but wait and see the results of ethanol in our cars.

    Thank you for your insightful and eye-opening comment,



  3. Morning!
    In a temperate climate like Panama, E5 will probably not cause a problem, especially in newer model cars (2005 and newer). The manufacturers have modified engine parts and computer controls to handle that percentage of ethanol. The problem will be older cars and small engines like lawn mowers and outdoor equipment as well as motorcycles.
    Higher concentrations like we have in the US are causing more problems due to ethanol’s difficulty in cold temperatures. Ethanol’s collection of moisture is another problem if the fuel is allowed to sit for a long period of time, like during winter when lawn equipment isn’t being used.
    The debate will rage for years, EPA vs oil companies makes getting a clear answer very tough.

  4. Hi Jim and Nena:

    Thanks for the explanation. Got a little nervous after Linda gave her views on the subject. My Toyota Corolla was manufactured in Brazil in 2006, that mean that I’m right on the brim of acceptance of Ethanol.

    We have no lawn mowers, outdoor equipment or motorcycles. So maybe, just maybe, I’m on the safety zone. However, I have my doubts that the Panama government would make a decision that will hamper motorcycles. We have many of those in Panama and increasing everyday.

    I understand the controversy between the EPA and the oil companies. The latter are always after the green stuff. 🙂



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