Brazil: Gasoline price drops for third straight week but remains above US$1.46

RIO DE JANEIRO, BRAZIL – For 87 days without a readjustment by Petrobras, gasoline has been registering a slight price drop at the gas stations for three weeks in a row, according to data from the National Petroleum, Natural Gas and Biofuel Agency (ANP).

The price of diesel has also been dropping.

Despite the drops in both fuels, gasoline is still well above R$7 (US$1.46) and is found in some cities close to R$8.50 a liter, while diesel is still around R$7 on the national average.

The average price of gasoline closed last week at R$7.218 a liter (a slight drop of 0.4% compared to the previous week and 1% since May 14).

On the other hand, diesel dropped 0.5%, to R$7 a liter for the S10 type (which is less polluting).

The highest price for gasoline found was R$ 8.49 and the lowest, R$6.18 (both in the Southeast region), according to data from ANP, which collects information on fuels weekly throughout the country.

INTERNATIONAL LAG

The average gasoline lag compared to the international market is already 20% and reaches 22% in some Brazilian ports, according to data from Abicom (importers association).

That of diesel is 14% on average but reaches 16% in the port of Araucária (Paraná). The fuel’s lag is smaller because it has fewer days without readjustment (28, against 87 for gasoline).

MORE COMPETITION

“We had a price spike for anhydrous [ethanol] that made C gasoline more expensive,” says Paulo Miranda, who was president of Fecombustíveis and left the entity last month because the price of ethanol has fallen in recent weeks (and the fuel is added to gasoline).

“Also, when the price is not adjusted for a long time, it stimulates a lot of competition, because the customer already knows how much each station charges and looks for the cheapest one. The stations start to think they are losing customers and reduce their margins,” says the former Fecombustíveis president.

In the case of diesel, Miranda says that the biodiesel mixture does not have as much weight in the composition (only 10%), and its value is also high in the market. “June is being terrible; the retailer is reducing the margin to win over the consumer”.

For the current president of Fecombustíveis, James Thorp Neto, the decisions of the owners of gas stations are individual and very dynamic, especially in an environment of greater competition.

“Our market is very dynamic, and there are daily oscillations from the distribution to the gas stations.”

FUEL READJUSTMENTS

Petrobras has not readjusted the fuel price since May 10, when it raised the price of diesel at the refineries by 8.9%, but continues under pressure from President Jair Bolsonaro (Liberal Party – PL), who has already fired three presidents of the state-owned company.

On Monday, June 6, Bolsonaro said in an interview on TV Terraviva that the Minister of Economy, Paulo Guedes, will solve the fuel issue “regarding taxes” in the coming days.

The president also said that the intention of the new Minister of Mines and Energy, Adolfo Sachsida, is to change the entire management of Petrobras, not just the Board of Directors.

With information from Estadão