Although oil is a commodity, that is, a raw material that is priced uniformly by international supply and demand, the final consumer price of gasoline — and other petroleum derivatives, such as diesel and LPG gas — varies immensely. around the world.
In the last week (June 7th to 13th) the price of a liter of gasoline for consumers went from US$ 0.02 (R$ 0.11) in Venezuela to US$ 3 (R$ 15.4) in Hong Kong , according to the Global Petrol Prices ranking, which surveys prices in 168 countries, weekly in most of them.
In addition to Venezuela, the countries where gasoline is cheaper are Libya (2nd), Iran (3rd), Syria, Algeria, Kuwait, Angola, Nigeria, Turkmenistan and Malaysia.
And the places where it is most expensive are Hong Kong (168th in order of cheapest to most expensive), Norway (167th), Denmark (166th), Finland, Iceland, Greece, Netherlands, Central African Republic, Monaco and Singapore.
And Brazil? It is in the middle, in 83rd place, with gasoline at US$ 1.41 (R$ 7.25) on average — or at least it was last week, before the readjustment announced by Petrobras of 5.2% in the price of fuel at the refinery (which makes up 38% of the value to the end consumer). The ranking with this week’s consumer prices should come out on Monday (20).
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Brazil currently has the second most expensive gasoline among South American countries — Photo: Agência Brasil
The price of a barrel of oil — defined internationally — is determined by two types of factors. “Endogenous factors, that is, factors that have to do with the industry itself, such as supply and demand”, explains economist Maurício Canêdo, a professor at the Getúlio Vargas Foundation, “and exogenous factors, such as wars, terrorist attacks, etc.”
“At the moment, the whole world is paying dearly for a barrel of oil because of the war (in Ukraine)”, says the economist.
But why, then, does gasoline vary so much from country to country?
“The price varies according to the exchange rate from the local currency to the dollar — and at the moment the real is very devalued against the dollar”, says Canêdo, “and other factors such as the tax logic and the subsidy policies of national governments .”
The countries that are at the top of the ranking of the cheapest gasoline are either oil producers or have the fuel almost entirely subsidized by the government. Or both, as in the case of Venezuela. In addition, the variation has another pattern: gasoline tends to be cheaper in developing countries and more expensive in developed countries — with the exception of the US (76th) and Australia (77th).
“The tax burden on fuel is higher in these countries with the aim of discouraging its use, making it less competitive and allowing the transition to renewable energies”, explains Canêdo.
In general, the countries in the ranking where the most expensive gasoline is the result of public policies to reduce the environmental impact “are countries where there is not such great inequality as in Brazil, where the most vulnerable population is disproportionately affected by the rise in fuel, especially the price of cooking gas”.
In Brazil, for a long time, the price of gasoline was not on par with the international price of a barrel.
“In the past, what was done was what we call orthodox control: using Petrobras’ balance sheet as a price control tool”, explains Canêdo.
In other words, if the price of a barrel or that of the refined gasoline that we import — because Brazil does not have a large refining capacity and needs to import — was too high, Petrobras would sell cheaper than it bought, leaving it in the red.
Since the policy of international price parity (PPI) was introduced, Petrobras has tried to match the price of gasoline at the refinery with the international price.
But the value is still outdated, explains Pedro Rodrigues, a partner at the Brazilian Center for Infrastructure (CBIE), and should continue even with the increase announced this Friday (17).
The average lag in the average price of gasoline in relation to the international market in the last week was calculated at around 19%, according to the Brazilian Association of Fuel Importers (Abicom). And according to Goldman Sachs, the adjustment was not enough to close this gap.
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Is it possible to hold prices?
With the PPI policy, the government lost the ability it had before to control the prices of gasoline, diesel and gas practiced by Petrobras, the analysts explain.
The government is still the company’s majority shareholder, so it appoints the chairman and 6 of the 11 members of the shareholders’ council.
President Jair Bolsonaro (PL) tried in May to dismiss the president of Petrobras, José Mauro Pereira Coelho, who he himself had appointed, and the councilors appointed by the government, but the change needs to be approved by the company, which is not immediate.
However, even if the president and directors are replaced, the executives who replace them no longer have room to avoid price parity because of a series of compliance rules (set of rules to make the company comply with legal rules and internal) adopted by Petrobras, says Pedro Rodrigues, from CBIE.
“The government has every right to replace the company’s president and directors with people closest to them, but the new ones cannot simply ignore the rules. They can legally respond as individuals if they do that”, explains the analyst. “It is also strange that the exchange is so frequent (as it has been in the Bolsonaro government).”
However, the government can still influence the consumer price through public policies. On Wednesday, Congress passed a bill to limit ICMS (state tax on goods and services) to 17%. The project must be sanctioned by Bolsonaro.
“It is a valid public policy, but it has an impact on the entry of resources. What needs to be questioned is whether it is our priority at this moment to use public resources to contain prices for everyone”, says Canêdo.
The economist argues that, to protect the most vulnerable people who are disproportionately affected by the rise, the government should create income transfer policies. “Like a gas voucher, for example,” he says.
Would privatizing Petrobras lower prices?
For Maurício Canêdo, privatization would not make gasoline prices fall — quite the opposite.
“With privatization prices would be fully matched, it would be fully PPI”, he explains. “That is, without the lag that we have today, they would actually increase.” “There are a number of reasons for privatization, but lowering prices is not one of them,” he says.
Rodrigues says that, in the long term, there could be a series of advantages in terms of solving structural problems that make fuel more expensive in the country — but privatization would need to be carried out with great care and planning.
“With the arrival of private investment, it is possible to meet the need for refining capacity and create transport infrastructure”, he says. “But if privatization was done anyway, you run the risk of replacing the current model with a private monopoly — which is absolutely no benefit.”
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