Brazil’s Bolsonaro: “Petrobras to announce fuel price reduction”

RIO DE JANEIRO, BRAZIL – President Jair Bolsonaro on Sunday, December 5, said that Petrobras will begin announcing a string of fuel price reductions, starting this week. However, the President did not announce the percentage reduction or deadlines.

The rise in fuel prices has been one of the main drivers of inflation, which has now enered double digits over the past 12 months and is an economic challenge for Bolsonaro’s administration.

In addition to affecting the President’s popularity, inflation has also been causing unrest among mayors. They complain that they are being pressured to readjust public transportation fares. Therefore, they are asking the federal government for financial assistance.

Another group severely impacted by the increase in fuel prices is truckers. One of Bolsonaro’s principal support bases, the workers have been organizing demonstrations against Petrobras’ price policy and the federal government’s inaction to contain inflation.

Under pressure, Bolsonaro announced a R$400 (US$71) aid for the teamsters, which would be paid for out of the fiscal space opened in the cap by the Court-ordered federal debt proposed constitutional amendment (PEC), passed in the Senate last week.

The President has also been reacting to criticism of high fuel prices by attacking governors and Petrobras itself. Regarding the former, he often says that high prices are a consequence of state taxes, particularly the ICMS (Tax on Circulation of Goods and Services).

“I did not readjust it, I kept it fixed since 2019, the value of the PIS/Cofins, which is a federal tax. The governors kept the percentage, which varies according to the value at the pump. And more than doubled the value collected with the ICMS. You want to criticize, do. But the right person,” he said on Sunday.

Recently, Bolsonaro also attacked Petrobras, saying he has no control over the company and stated that he was discussing a “solution” with Economy Minister Paulo Guedes.

“I have no control over the company, it has its own structure. It seeks profit. We had a serious problem in the past, in addition to corruption, with the issue of parity with international prices. We are looking to review this issue,” Bolsonaro said in recent weeks.

“It delivers gasoline at R$2.30 a liter. It reaches R$7 at the end of the line. It is an issue that I always try to debate with society to demonstrate where the problem lies,” the President also said.

On the other hand, in a Senate hearing ten days ago, the company’s president General Joaquim Silva e Luna said that it is “wrong” to blame Petrobras for the increase in fuel prices.

“Petrobras readjusts the price of these fuels based on several variables, such as the foreign market, the domestic market, how they behave, we observe three major markets – the United States, Europe and Asia – the competition between producers and importers, and the price variation in the world market,” he argued.

According to the company’s president, in the past 7 months, the state-owned company didn’t change the price of LPG for 95 days; did not increase the price of diesel for 85 days; nor the price of gasoline for 56 days. He also stated that the 15 readjustments made by the company resulted in 38 increases for consumers.