Why didn’t the government keep its promise to cut gas prices in half?

Economy Minister Paulo Guedes promised in 2019 to cut the price of cooking gas in half, a reduction that would come from the opening of this market in Brazil. Since then, however, the price of a 13 kg cylinder has gone from R$ 69, on average, to R$ 113 – an increase of 64% in three years. For experts heard by the UOLthe promise was a mistake and did not take into account the social role of cooking gas, which deserved a different pricing policy than that adopted for other oil products.

The problem begins with the fact that there is no single policy capable of reducing the price of cooking gas as significantly and as quickly as Guedes wanted, says Sérgio Bandeira de Mello, president of Sindigás (National Union of LPG Distributors). . This cut, he adds, would come from a set of structural changes, whose effects would take years to reach the final consumer.

“The ‘cheap energy shock’ promised by Guedes in 2019 does not have a quick response. There is nothing that can be done today for a result tomorrow. Promising is a danger. The government’s main mistake was not realizing that structural changes have an effect on infrastructure time, which is a long time. In a de-bureaucratized country, that time is four, five years. In Brazil it is much more”, he says.

“Nothing you do from an institutional point of view can change the price tomorrow. In addition, the price is influenced by many other factors, such as the dollar, oil, etc.”

Furthermore, the Ministry of Economy erred in wanting to apply the same policy intended for natural gas to the LPG (Liquefied Petroleum Gas, or cooking gas) market, according to Rodrigo Leão, technical coordinator at Ineep (Institute for Strategic Studies on Oil, Natural Gas and Biofuels).

For the expert, there should be a special guideline for cooking gas — a basic item that has an important social role.

“What happened in that period? [2019 a 2022] is that there was no change [no mercado de gás], on the contrary. The LPG pricing policy has become increasingly similar to that of other derivatives, following the PPI [Preço de Paridade de Importação] from Petrobras. With the price of a barrel of oil increasing and the exchange rate devaluing, cooking gas followed the increase we saw in other fuels”, he declares.

End of tiered pricing

Rodrigo Leão, from Ineep, also mentions as a factor that contributed to this increase the decision to revoke a 2005 resolution that recognized the need to adopt differentiated prices for cooking gas.

This guideline considered that LPG “has a high social impact”, since its cost affects the poorest part of the population, and that it is up to the national energy policy “to protect consumer interests in terms of price, quality of supply and products ”.

The resolution was extinguished in August 2019 by the CNPE (National Energy Policy Council), then chaired by Bento Albuquerque, now former Minister of Mines and Energy.

The justification given at the time was that the end of the practice of differentiated prices would correct distortions in the market and encourage “the entry of other agents in the stages of production and importation of LPG”, which supposedly would contribute to the increase in supply and the development of the market. market.

In practice, that was not what happened, according to Leão.

“The government has made the situation worse. From my point of view, they had the wrong view of the LPG market. Then they made the situation even more dramatic. [para o consumidor]”, evaluates.

I think that when you think about price adjustment measures, you need to consider the market structure you have. It seems that the federal government made a serious mistake not to understand this dynamics of cooking gas. It was a misunderstanding of reality, with the adoption of measures that in practice did not make much sense.
Rodrigo Leão, from Ineep

No prospect of reduction

The two experts consulted by the report said they do not believe in a reduction in cooking gas prices in the coming months.

Both cited the war between Russia and Ukraine as a factor of pressure on oil products around the world, in addition to the prospect that the real will devalue even more as elections in Brazil approach, as usually happens.

“I do not imagine that the price of a barrel of oil will explode, reaching US$ 200, for example. The problem is that we are in an election year, and the tendency is to have turbulence in the foreign exchange market. Exchange rate is a key variable in PPI. I see no prospect of price reduction, the trend is for stability or an eventual rise. If prices remain stable in the coming months, it will already be a glory, a victory”, says Rodrigo Leão, from Ineep.

“There is a trend towards stability in the international market. What I cannot promise is that this will bring stability to Brazil as well”, adds Sérgio Bandeira de Mello, from Sindigás.

government does not comment

wanted by UOLthe Economy Ministry said it would not comment on the matter.

Source: Wow