How is life in a city where gasoline costs R$ 8

The movement of cars is less on the streets, at gas stations and in parking lots in cities in the extreme south of Brazil. According to residents, the main reason is the cost of fuel — which continues to rise.

According to a study by Ibre/FGV, Brazilian driver inflation reached 18.46% in the 12-month period up to October. In Bagé, 378 kilometers from Porto Alegre, a liter of regular gasoline reached R$8.00. This is the most expensive price according to the National Agency for Petroleum, Natural Gas and Biofuels (ANP), which between October 31 and November 6 consulted 4,733 gas stations from the north to the south of the country.

At the beginning of 2021, a liter of regular gasoline had an average value of R$ 5.54 in Bagé. Since then, it increased by R$ 2.46. The escalation led to the creation of a CPI (Parliamentary Commission of Inquiry) in the City Council to investigate the reason for the high prices, which has yet to be defined.

To get around the “city with the most expensive gasoline in Brazil”, the way is to reorganize your routine. For the bricklayer Eduardo Dutra de Medeiros, 37, the rearrangement includes going to the supermarket every 15 days instead of weekly, in addition to creating more economical routes and changing the means of transport.

“I used to make car quotes, now I leave all orders for a single day, trace a path without many turns and still use my wife’s motorcycle to lower my cost,” says Medeiros. He wasn’t the only Bagan to trade four for two wheels.

As reported by the local press, the base of Detran-RS (Transit Department of Rio Grande do Sul) registered the license plate of 218 new motorcycles in Bagé between January and September 2021.

The increase was 32% compared to the same period last year, when there were 165 registered motorcycles. The advertising of a consortium is categorical: “Are you in the mood to save on gasoline? Go on a new motorcycle.”

In addition to joining the motorcycle, Medeiros has added the cost of gasoline to the value of labor — which he did not do until then. “I calculate the mileage from my house to the client, and how many days it takes me to carry out the work. Then I convert the amount of gasoline I use to the amount I pay for the liter at the gas station.”

According to the bricklayer, there have been occasions when customers have rejected proposals because of the extra charged for gasoline. He says he has no alternatives – converting the car to CNG (Natural Vehicle Gas) is impractical: like other cities near the border with Argentina and Uruguay, Bagé has no post authorized to sell the product.

Why so expensive in Bagé?

The question does not have a single answer, according to João Carlos Dal’Aqua, president of Sulpetro (Union of Fuel Stations of RS).

The most heard explanation is that the municipality is far from the main refinery in Rio Grande do Sul, the Alberto Pasqualini (Refap), in Canoas — about 400 kilometers away. This creates a higher logistical cost. It so happens that there are cities even further away from Refap, and that does not mean that the price of gasoline is more expensive than in Bagé. Here come the other answers.

Bagé, for example, is not characterized as a large fuel consuming center, as is the metropolitan region of Porto Alegre. “In large urban centers, the service can earn sales in scale. But in smaller cities it is difficult to have new sales, which results in a greater transfer to the consumer”, explains Dal’Aqua.

In addition, smaller posts generally have less bargaining power with distributors. It is also necessary to consider that each dealer adopts a marketing strategy when putting the price on the pump.

The president of Sulpetro mentions that Bagé gets a bad reputation because that’s where the ANP conducts research. In Dom Pedrito, a neighboring municipality with 38,000 inhabitants (where the ANP does not carry out research), fuel is even more expensive — one of the city’s gas stations sold a liter of regular gasoline at R$8.17 this week; gasoline with additives cost R$8.27.

According to Sergio Ivan Alves Lopes, 46, the increase in gasoline at the pump explains a good part of the intense movement registered in his bicycle sales and repair shop. “The two mechanics at the store are always busy,” he says. In 2021, the company’s revenue grew 50% compared to 2019, the year before the pandemic. Not only because of sales, but also because of inflation — imported products became more expensive.

The bicycle is an advantageous option for getting around in a small town like Dom Pedrito. Motorcycles too, like Bagé. “Motorcycles are not as big as a car, right? But the cost of the bike has also gone up here”, complains Lopes.

Before the pandemic, R$2,000 were enough to buy a used popular motorcycle. “Now, you leave with R$5,000 to buy — and there are times that, here in the city, you can’t even find a motorcycle at that price.”

One post, two prices

Flávio Farias Staevie, 55, owns a network with three gas stations in Bagé. In addition to complaining about the stigma that the city carries, as a result of ANP surveys (including at two stations he owns), he guarantees that, in practice, no station in the city sells gasoline at the price shown on the totem pole.

“Since I entered the business, in 1994, there has been a culture of discounting in the city”, says the businessman. Each gas station adopts its own rebate policy.

Staevie, for example, grants a 5% discount through an app. Any customer can open the station’s app and generate a promotional code, causing a liter of regular gasoline to drop from R$7.993, as shown at the pump, to R$7.597.

For corporate customers, such as dealerships and supermarkets, the entrepreneur grants even greater discounts, which can reach 10%, depending on the average monthly consumption. It is one of the ways he found to attract new customers and retain the old ones. Even so, the amount of gasoline sold does not stop falling.

“I don’t know how to quantify you precisely. What I do know is that today I sell less gasoline than I used to,” he says. The entrepreneur sells even less to employees: before, each gas station attendant went to work with their own car. Now, they take turns with each other, in a carpool scheme. Yet another change brought about by high gasoline prices.