Brazilians are paying more and more to fill the car’s tank. Last Monday (25), Petrobras announced a new readjustment in gasoline and diesel prices for its distributors. The increase, applied on Tuesday (26), was 7.04% for gasoline and 9.15% for diesel.
In the year, diesel already accumulates an increase of 65.3% in refineries. Gasoline, on the other hand, rose 73.4% in the same period. According to the Broad National Consumer Price Index ( IPCA ), which shows the appreciation for the consumer, the highs in 12 months were 33.05% and 39.6%, respectively .
At the country’s gas stations, the escalation in prices is evident. A recent survey by the National Agency for Petroleum, Natural Gas and Biofuels (ANP) showed that the average price of gasoline at gas stations in the country rose 3.1% this week, reaching R$7.88 a liter — the 4th consecutive weekly high .
Impoverishment, wage tightening, higher interest rates: understand the effects of double-digit inflation on the economy and your life
First, you need to understand how gasoline and diesel prices are set. The formation of fuel prices is composed of the price charged by Petrobras at the refineries, plus federal (PIS/Pasep, Cofins and Cide) and state (ICMS) taxes, in addition to the cost of distribution and resale.
There is also the cost of anhydrous ethanol in gasoline, and diesel has the impact of biodiesel. The variations of all these items are what determine how much fuel will cost at the pumps.
The main ‘engine’ of the rises in gasoline and diesel has been the devalued real. Until last Friday (22), the dollar – currency to which the value of oil is pegged – had accumulated a high of 8.5% against the real this year .
“I would emphasize that the main culprit for the rise in fuel prices is the exchange rate, by far. Oil has already been at a value above the current one, and fuel did not cost what it costs today”, says Walter de Vitto, an analyst at the consultancy Tendencies.
What gives strength to this movement of loss in value of the Brazilian currency are the various uncertainties of investors regarding the direction of the economic policy of the Jair Bolsonaro government .
The president’s coup-like speeches in the September 7 demonstrations increased the level of uncertainty in the economy and messed up the indicators .
Another striking episode was the hole in the spending ceiling for financing Auxílio Brasil, especially after Economy Minister Paulo Guedes admitted dribbling the rule.
In addition to raising the dollar, political crises such as this reduce the likelihood of public policy approval in Congress.
“The fiscal issue needs to be tackled, now there is the political issue. These factors generate this uncertainty, and the exchange rate reflects all of this,” says de Vitto, from Tendências. “The demand for the real decreases, the demand for the dollar increases, and the Brazilian currency devalues.”
There is also an additional pressure factor. The value of fuel is also influenced by the recovery in the price of oil on the international market.
After the shock caused by the coronavirus pandemic, the global economy should have a robust growth this year, which increases the search for the commodity and, consequently, helps to push prices up.
“With this rise in the price (of oil) on the international market, the price of fuel is higher right from the start,” says Juliana Inhasz, professor and coordinator of graduation in economics at Insper.
Petrobras Pricing Policy
In the Michel Temer government , Petrobras changed its fuel price policy to follow parity with the international market.
The fuel sales prices charged by the state-owned company started to follow the value of oil in the international market and the exchange rate variation. Thus, a higher price of the commodity and/or a devaluation of the real have the potential to contribute to higher prices in Brazil, for example.