The recent increase in oil prices has focused great attention on Brazil’s progress towards energy independence and has led many to question why the United States cannot achieve the same result. The Washington Post, for example, ran a front-page story touting Brazil as a model for the “road to energy independence.” Brazilian President Lula de Silva already declared independence in April of this year. The progress toward energy independence in Brazil comes from a combination of oil and ethanol production, with increased oil production playing the dominant role. The expansion of Brazil’s domestic oil resources has led to the expectation that it will become a net oil exporter by the end of 2006, firmly establishing independence from foreign imports.3 Brazil’s use of sugarcane-based ethanol, however, also contributes to its energy achievements. Many proponents of ethanol-based fuels attribute these accomplishments solely to ethanol, now a 30-year old industry in Brazil. Having matured since the advent of flex-fuel vehicles in 2003, the ethanol industry indeed adds to, but in no way dominates, Brazil’s energy progress. Before looking toward Brazil as a model for energy independence, it is necessary to review the reality of the roles of ethanol and oil in the Brazilian energy system.