Amid the tax cut on the eve of the elections, the price of gasoline began to fall in Brazil. The movement, however, was not accompanied at the same pace by diesel oil, which remained above R$ 7 at pumps at gas stations.
The difference, analysts say, is associated with a combination of factors. Gasoline felt the most recent ICMS (state tax) cut, while diesel is affected by a mismatch between supply and demand in the international market.
Refineries and ICMS
In the second half of July, Petrobras announced two consecutive declines in the price of gasoline at refineries. The state-owned company’s policy takes into account the reference values in the international market.
Final gasoline prices in the country have also been strongly impacted by the cut in ICMS rates on fuels. The law was sanctioned in June, on the eve of the elections, by President Jair Bolsonaro (PL).
The liter of fuel at Brazilian gas stations dropped 2.5% just last week, to R$5.74, according to a survey by the ANP (National Agency for Petroleum, Natural Gas and Biofuels).
It was the fifth consecutive pullback at the bombs. The accumulated drop in the period reached 22.3% – or R$ 1.65 per liter.
Diesel, on the other hand, did not undergo a reduction in Petrobras’ refineries, reflecting the international pressure on prices.
In addition, the final price of fuel in Brazil was less affected by the recent ICMS cut because most states were already charging rates lower than the ceiling established by the new law.
Last week, the average price of diesel at gas stations dropped just 0.3%, to R$7.42, according to the ANP. The drop in the last five weeks reached just 2% – or R$ 0.15 per litre.
Mismatch between supply and demand
From 25% to 30% of the diesel consumed in the country is usually imported, say analysts. Pressure on prices is linked to the effects of the Ukrainian War.
Since the conflict, there have been obstacles to exports from Russia. Amid the tense atmosphere, Vladimir Putin’s country also cut the supply to Europe of natural gas, a source of energy for heating homes and operating industries.
The substitute in this case is precisely diesel. The situation stimulates demand for fuel and puts pressure on prices before winter in the northern hemisphere.
“A determining factor going forward will be the intensity of the European winter. We are seeing a stock for the winter”, points out consultant David Zylbersztajn, former director of the ANP.
Other risks in the external scenario, according to analysts, come from the hurricane season in the United States.
High price trend for the rest of the year
The director of Commercialization and Logistics at Petrobras, Cláudio Mastella, said on Friday (29) that he did not expect a drop in diesel until the end of the year, given the problems in supply and the proximity of winter in the northern hemisphere.
“We see a scenario of maintenance of prices of derivatives similar to the current ones, especially in the case of diesel, which has an impact of the approach of winter in the northern hemisphere”, said the Executive.
“The expectation is that diesel will remain in this scenario or even stronger, unless the expectation of a major global recession is confirmed”, he added.
Analysts go along the same lines. “The price of diesel should continue at a high level. The tendency is to remain above gasoline”, projects João Luiz Zuñeda, founding partner of consulting firm MaxiQuim.
Aurélio Amaral, former director of the ANP and partner at Schmidt Valois Advogados, believes that an additional factor of pressure on prices in the second half of the year is the flow of agricultural crops in Brazil.
“We are in a process of high demand for diesel due to the harvest. The trucks come and go in regions like the Midwest”, he indicates.
“We still don’t have a shortage scenario, but the pressure is great. The trend is still high prices”, he adds.
Bolsonaro’s Headache
Diesel plays against the federal government’s strategy of lowering fuel on the eve of elections. The high price of the product causes discontent among truck drivers, who have been criticizing Bolsonaro and Petrobras.
This Tuesday (2), the president said that diesel may fall, despite the state company having pointed in the opposite direction last week.
“Brent abroad yesterday dropped around US$ 100. It is a sign that you can reduce fuel at Petrobras again, perhaps diesel. This is not a crystal ball. If the dollar falls, the tendency is also to fall”, Bolsonaro said in an interview with Rádio Guaíba.
Impact on food and bus tickets
Used in the transport of various items, including food, diesel oil usually generates indirect effects on inflation for the final consumer. The high price also impacts the transport of passengers by bus.
“There is a strong tendency to increase the price of diesel in the international market”, says Sergio Araújo, president of Abicom (Brazilian Association of Fuel Importers). “Supply is very restricted, and demand is expected to increase.”
He states that he does not believe in diesel shortages in Brazil, but he sees a chance of supply difficulties in places further away from refineries and ports.
The ANP should decide on Friday (5th) whether or not to increase mandatory fuel stocks in the country between September and November. The measure under analysis would be an attempt to remove the risk of shortages, but part of the market fears higher logistics costs.
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