Government studies measures to contain fuel prices, but expected effect is limited

Without having a silver bullet to bring down fuel prices, the Jair Bolsonaro (PL) government has on the table a menu of measures that, although palliative, can give the Chief Executive the speech that there is some effort to contain values. during the election year.

The list of possibilities includes a cut in the biodiesel import tax and a change in the composition of fuel sold at the pump. Some can be adopted by the Executive itself, without the need for congressional approval.

The strategy is considered crucial at a time when Bolsonaro follows in second place in the polls, behind former president Luiz Inácio Lula da Silva (PT). In March, Datafolha pointed out that 68% blame Bolsonaro for the rise in fuel prices.

Last week, after Petrobras announced a new increase in the price of diesel, Bolsonaro fired Bento Albuquerque from the command of the Ministry of Mines and Energy and appointed Adolfo Sachsida, one of the president’s most faithful allies and until then an adviser to Minister Paulo, to replace him. Guedes (Economics).

Until last week, different members of the government expressed the expectation that Cade (Administrative Council for Economic Defense) could take a measure to change Petrobras’ pricing policy based on ongoing investigations at the agency about the company.

But CADE’s general superintendent, Alexandre Barreto, said in an interview with Sheet published this week that the municipality will not interfere. “Cade is not competent to regulate Petrobras’ price policy and cannot determine it or any company that practices price A or B”, he says.

The government analyzes other fronts of action. One of the ideas is to reduce the tax on biodiesel imports, making the supply of this fuel in Brazil cheaper. The cut could facilitate the entry of biodiesel from Argentina, but it faces resistance from Brazilian producers.

Brazilian mills fear losing competitiveness with the expansion of imported products. But the government believes that, even with the cut in tariffs, the high exchange rate continues to act as a sort of line of defense for the national product.

Another measure under analysis is the change in the composition of diesel. Today, a 2014 law requires the diesel sold at pumps to contain 10% biodiesel. As this type of fuel is more expensive, a cut in this mandatory percentage could provide some relief at the time of rising prices.

The law itself authorizes the CNPE (National Energy Policy Council) to cut the percentage to 6%, on a temporary basis, “for a justified reason of public interest”.

The measure, however, must also face resistance, since it would represent a disincentive to the biodiesel industry in Brazil. Furthermore, it would be a reversal of the signal given in recent years, of an increase in this percentage up to the limit of 15%.

Although they may have a limited effect on prices, the initiatives would serve to send the message to the population that the government is at least moving to tackle the problem.

Even if the final impact is low, the disclosure of these actions can feed Bolsonaro’s base and contribute to the attempt to show the president’s initiative, in the evaluation of government members.

In a first attempt in this direction, Sachsida announced an official request for studies for the privatization of Petrobras – an operation considered complex and which is unlikely to advance in an election year.

At the same time, the government is also evaluating measures that may please truck drivers – an electoral base that is sensitive to the issue of fuel.

One of the options is to open the way for companies and gas station attendants to sign contracts that take into account the final price of the fuel used on the trip – in order to avoid losses for the driver if there is an increase between departure and arrival.

The idea is to make the ANTT (National Land Transport Agency) responsible for regulating the model, which would transfer the risk of fuel fluctuations to companies that hire freight.

Also in this case, government sources recognize that the impact of the measure would depend on different factors, as the company could cut the truck driver’s remuneration to compensate for the assumed risk – or, even, pass the cost to consumers of the transported products.

Measures such as fuel subsidies continue to face strong resistance from the economic team and, according to reports from government officials, have not been requested with the same pressure observed in previous moments.

In addition to arguing that subsidies do not have the desired effect on prices, the economic team recognizes that this type of measure would encourage the use of fossil fuels and would go against the global effort in recent years for greater use of green alternatives.

The very reduction of the biodiesel blend in the fuel formula to be used in the country could be the target of this type of criticism.

Even with all the studies, the view within the government is that a structural change in prices is only possible with the end of the Ukrainian War – which has put pressure on oil prices in recent months. Until the conflict in Europe ends, the tendency is for prices to continue rising.

Julio Wiziack collaborated.