Brazil: Gasoline has doubled in price since 2016

RIO DE JANEIRO, BRAZIL – Drivers who fill up with regular gasoline pay 99% more in Brazil since the implemented change in 2016 when Petrobras adopted the Import Parity Price (PPI) to price fuels in Brazil.

A survey by the Petrobras Social Observatory shows that the liter cost R$3.66 in October 2016, the month in which the state-owned company adopted the system. According to the entity, the price of a liter of gasoline at the pumps is R$7.29 today.

Although foreseen as a possibility since 1938, the use of the PPI was only made from 2016 on. The initial scope of the policy provided for monthly assessments for readjustments in fuel prices, up or down, depending on the oscillation of the cost of a barrel of oil on the global market.

The PPI was implemented in 2016 as a management methodology without being accompanied by a normative act. But to reverse it definitively and reduce the prices charged at the pumps, the path goes through changes in the legislation, according to the former director of the state company between 2003 and 2007 and professor at the Institute of Energy and Environment at the São Paulo University (USP) Ildo Luis Sauer.

In the professor’s evaluation, although Law 9.478/1997 says that the ANP should organize the market, determining guidelines for importing, exporting, and refining oil in Brazil, it does not say how this should be done.

“The problem is in the legal structure that deserves a broad and open public debate. But no public policy can be made voluntarily by will; it needs to be backed by law and have the support of the National Congress,” he evaluates.

For Sauer, the path is to make the law compatible with the principles presented in the Federal Constitution. One of the points that he highlights is to treat petroleum as public property and make investments in refining and self-sufficiency in the fuel chain.

The measure would be able to generate wealth for the country to promote improvements in essential areas for the population, such as health, education, infrastructure, science, technology, and the environment.

Another suggestion is to use the resources of the Contribution for Intervention in the Economic Domain (CIDE) – one of the taxes levied on the final price paid by consumers for gasoline, diesel, and ethanol. The tax is a federal competence and was created in 2001 to calculate the importation and commercialization of oil and its derivatives, natural gas and its derivatives, and ethyl alcohol fuel.

“One can think of making a law that should use part of that money from Petrobras’ wealth in emergencies like this one, not the Direct Treasury fund, CIDE. It was created precisely to stabilize these situations. These instruments already in the constitution can be used to make Petrobras operate in another way,” he analyzes.

SUBSIDY AS AN ALTERNATIVE

For the researcher Carla Ferreira from the Institute of Strategic Studies of Petroleum, Natural Gas, and Biofuels (Ineep), an alternative would be establishing a fund to subsidize the final price of fuel and reduce the consequences for the final consumer.

“It would be a stabilization fund that a tax could feed on crude oil exports (from the pre-salt, for example). It could dampen international price oscillations. In addition, the establishment of a variable rate tax. If the price is high, you reduce the tax rate internally,” he said.

ALTERNATIVES ON THE HORIZON

Currently, two projects that seek to change the price of fuels in Brazil are in progress in the Federal Congress. One of the projects foresees the creation of a stabilization account used to cushion oscillations in fuel prices, especially due to variations in international oil values. The funding sources would be revenues from oil royalties, special participations, and dividends paid by Petrobras to the Union.

The other establishes that the states will have the option to create a single rate of ICMS on fuels. But until this is implemented by the governors, the tax on diesel and biodiesel should be levied on a defined calculation base obtained by the moving average of the last five years.

With information from O Tempo