India says ethanol mix saved Delhi petrol buyers as crude spiked to $135

Petrol in Delhi could have touched about Rs 125 a litre when global crude climbed to $135 a barrel if refiners had not mixed ethanol into fuel, India’s petroleum ministry said on Friday. Instead, consumers paid Rs 94.77 a litre, as the government defended its ethanol programme against criticism over cost, food security and taxpayer support.

The ministry said ethanol, bought domestically at pre-set prices, made up 20% of each litre and helped cushion the surge in crude. At the peak of the shock, the programme cut retail pain by nearly Rs 30 a litre. That is a big gap. And a political one, too.

Government pushes back on subsidy and food fears

Officials also rejected claims that grain meant for the poor was being diverted for ethanol production, or that subsidised rice from the state-run Food Corporation of India was being channelled into the programme. The pushback comes as India expands ethanol blending, a policy that has drawn attention well beyond its borders for its energy-security and food-price implications.

Many major fuel-consuming countries are watching similar trade-offs. Biofuel blending can soften import bills when oil spikes, but it also raises questions over land use, crop diversion and the cost of keeping pumps supplied. India has tried to frame the programme as a hedge against volatile crude markets.