Ethanol use in Brazil as a motor fuel has been largely promoted since the two oil shocks of the 1970s, either as a gasoline additive (anhydrous ethanol) or as a gasoline substitute (hydrated ethanol). As of today, the uncertainties in the international oil markets, the methyl tertiary butyl ether (MTBE) ban in the US and the growing concerns with global climate change, all justify the quest for a new role to be played by ethanol worldwide. The current prevailing view sees ethanol as a real threat to gasoline and, eventually, to oil itself. This paper examines this issue and concludes that by replacing mainly MTBE and not allowing the use of improved Otto engines, E10 (gasohol blend) does not pose any serious treat to the oil industry, nor do flexfuel vehicles using fairly typical gasoline engines and, in the lack of ethanol supply, running on gasoline. On the other hand, if Otto engines at compression ratios found in diesel engines are promoted, then E30 could become a suitable strategy for spreading the use of ethanol fuel in large volumes and also for saving gasoline. This paper proposes coupling policies of blending ethanol with gasoline, with policies aiming at saving fuel use in light duty vehicles (LDV). (C) 2007 Elsevier Ltd. All rights reserved.