Opinion – Vinicius Torres Freire: The price of bread and electoral pricing for gasoline and diesel

The government of Jair Bolsonaro wants Petrobras to readjust its prices only every three months, one hears in the Planalto. How will you do that, it was not possible to find out. But “something needs to be done now”, say the palaces.

Nobody explains how they will intervene in the oil company. There are rumors of dismissal from the board, which is almost impossible to confirm, not least because these decisions are the result of Bolsonaro’s faniquitos. But the intervention would have to go far beyond the change of command.

It is also not explained what the method of this price control will be. Every quarter, Petrobras would make an adjustment according to which criterion? Would the quarterly price compensate for losses (or gains) from past months if the company had charged less (or more) than the international price? Is the new price merely the international price on the date of the adjustment?

If the international price increases and Petrobras charges below this “parity”, what about diesel importers? They tend to stop caring. You may run out of diesel. Will the government force Petrobras to import diesel and sell it on the market at a price below cost?

Governments around the world are trying to find a way to mitigate the effects of inflation. In Europe, for example, they give a kind of energy allowance in order to compensate for the tremendous increase in the cost of energy.

Late last week, India said it will control wheat exports. Inflation there also rose (6.95% year, up to March); the basic interest rate has increased for the first time since 2018. A shortage of bread, oil and onions could cause outrage. The Indians also say that they will reserve exports to more vulnerable countries.

India is one of the major world producers. It was compensating, to a lesser extent, for the scarcity caused by the war (Ukraine and Russia had about 30% of the world market for wheat exports).

The price of wheat, of course, jumped, up about 18% in one week (one-month futures price in Chicago). To make matters worse, the U.S. Department of Agriculture (the “ministry”) estimated last week that the world’s stockpile of the product will reach the lowest level in half a dozen years and that wheat production will fall for the first time in four years. .

Recently, the price of several commodities has calmed down, although still floating in the stratosphere. But there are other complications in the market.

In addition to the wheat problem, there is a shortage of diesel, which is becoming much more expensive than oil. Now, the price of gasoline has also risen even more (this is the fuel prices on the market that is a reference for Petrobras, in the USA). Due to the international parity policy, the oil company should already be studying at least one gasoline readjustment.

And? What do wheat, India, Petrobras readjustment have to do with? Obviously, this is about inflation. In May, the IPCA for the month should be less high, given the contribution of electricity (the most expensive tariff flag has dropped). The dollar, despite recent tantrums, costs less than at the beginning of the year.

But wheat and diesel are lacking. If the Covid situation in China gives a refreshment, it is possible that the barrel of oil will also rise again (from US$ 110 to US$ 120).

In the world of power, there is less talk about the price of food than about diesel and gasoline, which affect more vocal electorates. But the half-muted anger will continue to boil because of various famines. The Bolsonaro government, with no policy for anything, “will do something”, even if it is to save a couple of points in the election polls. It’s more roller, but not a solution.