Why gasoline will remain expensive even with the change of Petrobras president

The resignation of the president of Petrobras, Joaquim Silva e Luna – not yet official, but confirmed by the Ministry of Mines and Energy this Monday (28) -, should not change the price policy of the state-owned company, assess economists who work in the financial market. .

According to analysts, the dismissal is a political action by President Jair Bolsonaro (PL) to make clear to his base in an election year his discontent with the rise in fuel prices, after the sharp readjustment promoted by Petrobras in early March, with an increase in 25% for diesel, 19% for gasoline and 16% for bottled gas.

But, as happened with the resignation of Roberto Castello Branco in February 2021, after a readjustment of 14.7% in diesel and 10% in gasoline by the state-owned company that month, economists estimate that the departure of Silva and Luna should not result. in a significant change in the direction of the company.

Even more than the name chosen to replace Silva e Luna is that of consultant Adriano Pires, director of the CBIE (Brazilian Center for Infrastructure) and who was a counselor for the energy area of ​​the Aécio Neves campaign (PSDB) in 2014.

The new president of Petrobras was a fierce critic of the price control policy during the government of Dilma Rousseff (PT) and is a vocal defender of international parity – a model in which the price of fuel in the domestic market follows the variation of items such as the price of a barrel of oil abroad and the dollar exchange rate.

In an interview with BBC News Brasil at the end of February, on the occasion of the beginning of the war in Ukraine, Pires defended that rising oil is good for Brazil, despite generating inflation, because the country is a producer and exporter of oil and, therefore, , the tax collection of the Union, States and municipalities grows when prices rise.

‘It is not easy to change the pricing policy’

“The change is bad, because it shows that the government is interfering in the company”, evaluates Gabriel Leal de Barros, partner and chief economist at asset manager Ryo Asset.

“I don’t want to minimize this political interference, but I believe that the market has already understood that the way Bolsonaro conducts is noisy, without there being any material change in the company’s policy at the end of the day”, he observes.

“That’s what happened with the entry of Silva e Luna. We are living again what we experienced when Castello Branco left, that the market was super apprehensive and, in the end, Silva e Luna did not change [a paridade de preços]. The truth is that it is not easy to change policy and the market has understood that”, concludes the analyst.

For José Francisco Lima Gonçalves, chief economist at Banco Fator, the market’s disbelief regarding a change in the parity policy is reflected in the small drop in Petrobras shares this Monday.

The company’s common shares (those with voting rights) dropped 2.63%, traded at R$34.08, and preferred shares (non-voting) dropped 2.17%, quoted at R$31.60.

Shares were already in decline even before news of the likely resignation, due to the drop in oil prices on Monday, with the tightening of the lockdown against Covid-19 in China, which raises concerns about the growth of the Asian country’s economy. .

“A drop of 2.6% is not much, apparently people are not taking it very seriously”, observes Gonçalves.

“How has this ever happened? [a demissão de um presidente da Petrobras sob Bolsonaro após reajuste de preços]this is seen more as a ‘kickback’, an attempt by Bolsonaro to say ‘I do what I can, but the people don’t help’, as he has done recently”, he observes.

Rafaela Vitória, chief economist at Banco Inter, shares her colleagues’ view that a change in policy is unlikely, but reinforces that it would be very negative for the economy and highly disliked by the market.

“It would be very negative, not only for Petrobras, but also from a fiscal point of view, because price control is never well regarded. in the future”, says Vitória.

“If in fact there is a change in policy and a forced reduction in prices, this would worsen interest rate expectations, at a time when the Central Bank has finally managed to anchor expectations of a rise in the Selic at 12.75%. raising interest rates further, if expectations worsen again, it could impact the growth of the economy”, he adds.

‘Rising oil is good for Brazil’

Quoted to assume the presidency of Petrobras, the energy sector consultant Adriano Pires is a historical supporter of the policy of price parity.

Petrobras adopted the so-called PPI (Import Parity Price) in 2016, after years of practicing controlled prices, especially under Dilma Rousseff’s government. Price control was a way of mitigating inflation, but it caused great damage to the oil company.

Because of this policy, at times like the current one, when oil is more expensive on the international market due to the effects of the war in Ukraine, fuel prices are more expensive on the domestic market.

In an interview with BBC News Brasil on February 24, when the barrel of oil reached values ​​above US$ 100 for the first time since 2014, Pires said that rising oil is good for Brazil, despite generating inflation.

“Brazil today, unlike in the past, has become a major producer and exporter of oil. So expensive oil increases state, municipal and federal revenue in Brazil. This is good news, an importing country is much worse off than Brazil” , said Pires, at the time

“Sometimes people call me and ask: ‘Adriano, will the oil go back to US$ 50?’ I say: Brazil is an exporter, I want oil to go to US$ 200. Ask Saudi Arabia if it prefers oil to US$ 200 or US$ 50, now we are on the Saudi Arabian team”, he added.

Pires then defended using part of the revenue increase generated by the rise in oil prices to create social programs aimed at specific audiences, such as subsidizing urban transport fares, giving aid to self-employed truck drivers and increasing the number of families benefiting from the approved gas allowance. in Congress last year.

In February, the Senate approved a project for the federal government to transfer to municipalities, states and the Federal District the value of free access to the elderly in urban public transport. The proposal would avoid increasing the ticket this year, according to city halls, but it still awaits a vote in the Chamber.

The Senate also approved a project that expands access to gas assistance for 11 million families and a gasoline allowance for taxi drivers, app drivers and delivery people. The proposals are also awaiting a vote in the Chamber, but aid for drivers would only be possible in 2023, due to electoral legislation.

Gonçalves, from Fator, and Leal de Barros, from Ryo Asset, see Pires’ name with good eyes.

“Adriano is a guy in the sector, a technician whose specialty is the oil and gas sector. This would minimize the market’s fear of a ‘wooden horse’ in the pricing policy”, says Leal de Barros.

“Change is bad anyway, but one factor that minimizes it is the reputational cost of a next president who is an expert in the sector to face this erosion of credibility. [que seria gerado por uma mudança na política de preços]. Not everyone is willing to throw their name in the trash to meet a political demand,” he adds.

According to Barros, the reaction would be very different if the chosen one were a name like that of Caio Mario Paes de Andrade, current special secretary for Debureaucratization, Management and Digital Government at the Ministry of Economy and formerly president of Serpro (state government data processing ).

Andrade’s name circulated in the market as a possible replacement for Silva and Luna in recent days.

“He has no experience in the sector and the market would certainly look down on him”, concludes the economist at Ryo Asset.