Petrobras completes three months without increasing gasoline, and the lag drops by 20%
- June 12, 2022
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The latest increase in gasoline prices at Petrobras refineries was announced in early March
In the midst of a tug of war with the government and changes in the board, the Petrobras completes this Friday, the 10th, three months without the gasoline prices be adjusted in their refineries. The latest change was announced on March 10, when the oil company raised gasoline prices the next day by 18.7%.
Since then, gasoline prices have not changed more, while diesel has already had another readjustment in May.
In the last trading session on Thursday, 9, the average lag of gasoline in relation to prices on the international market reached 19%, according to the Brazilian Association of Fuel Importers (Abicom). The value refers to the quotation at market opening.
At the time of the last increase, on March 10, prices had already gone two months without adjustment, but the interval this time is the largest in more than two years.
The discussion takes place in the midst of an exchange in the Petrobras board. Also this Friday, the day will have the repercussion of the officialization of Caio Mario Paes de Andrade as nominee of the government to the presidency of the state-owned company. The Ministry of Mines and Energy released a statement on the subject on Thursday night, which also included the list of nominees for the state-owned company’s board.
The names will be analyzed by Petrobras bodies and, later, a shareholders’ meeting will be called to vote.
clashes with the government
Paes de Andrade is on the team of Economy Minister Paulo Guedes and, if confirmed, will take over Petrobras after a series of layoffs in the position.
Since the last hike in gasoline in March, the state-owned company has had two presidents. General Joaquim Silva e Luna was fired by Bolsonaro at the end of March, worn down by the last rise in gasoline prices that month. Afterwards, the government appointed José Mauro Coelho, who stayed in office for just over a month. Coelho also got angry with the government by raising the price of diesel and indicating, in public statements, that the state-owned company would maintain market prices.
Petrobras prices will have to rise soon if the government wants to maintain the import parity policy (PPI).
The model equates the domestic price of the state-owned company with the international market, having been adopted in the Michel Temer government (MDB), from 2016, and maintained by President Jair Bolsonaro when he took office.
The government’s growing concern about fuel comes amid the impact of inflation on Bolsonaro’s popularity, four months before the October elections.
The government is trying to pass measures in Congress to cut the ICMS (state tax) on fuel, a move that is criticized for reducing the revenue that states and municipalities use for services such as education and health. Negotiations on the bill were in full swing during the week in the Senate, and the expectation is that there could be a vote next week.
The president also gathered high-ranking ministers this week and does not rule out editing a public calamity decree to subsidize fuel.
The measures, however, may have little impact given the difficult scenario in the international market, with oil hitting records in the face of the war in Ukraine and the recovery of the economy after the height of covid-19.
The price of a barrel of the Brent type, used as a reference by Petrobras, surpassed US$ 100 at the beginning of the war in Ukraine and never left that level, reaching more than US$ 120 on Thursday.
Gasoline at BRL 8
Petrobras’ decisions concern the state-owned refineries, which account for about 80% of the derivatives (gasoline, diesel and others) consumed in Brazil. The rest is already sold at prices closer to international prices by importers and private refineries.
For the consumer at the end, the average price of regular gasoline in the week until June 4 was R$ 7,218/liter, according to a weekly survey by the National Agency for Petroleum, Natural Gas and Biofuels (ANP). The gas station with the highest value found in the survey even sold gasoline at R$ 8.49/liter.
O diesel oil was sold on average at R$ 6.88/liter in the weekwith a maximum price of R$ 8.30 at a gas station.
Diesel, unlike gasoline, had more than one readjustment in the last three months. The price was increased by Petrobras on March 10 (up 25%), along with that of gasoline, but was readjusted again a month ago, on June 10 (up 9%).
Even though, diesel is also lagged against international prices by 15% (at Thursday’s opening), according to Abicom.
There is a special concern with diesel because this was one of the oil products whose prices in the international market have risen the most, while Petrobras manages to refine only 70% of the diesel consumed in Brazil. Lower domestic prices can make it difficult for private entities to import and lead to shortages, which made Petrobras readjust the price more quickly.
In a note sent to the press this month, Petrobras stated that, especially in the case of diesel, “there are no fundamentals that indicate the improvement of the global balance and the structural retreat of the international reference quotations”. “Given this situation, it is essential that the practice of competitive prices and in balance with the global market be a reference for the Brazilian fuel market, aiming at national energy security”, said the state-owned company.