Brazil’s state-owned Petrobras drives diesel prices up by a further 8.9%

RIO DE JANEIRO, BRAZIL – On May 9, Petrobras announced a further 8.9% increase in diesel prices at refineries, against the express wishes of President Bolsonaro. From May 10, the average price per liter will go from R$4.51 (US$0.88) to R$4.91. The most recent readjustment was made 60 days ago, on March 11, when the company increased fuel prices by almost 25%.

On Saturday (7), Jair Bolsonaro called once more on Petrobras not to raise fuel prices again. He said that the state-owned company was making billions in profits “at the expense of the people” and that “Brazil can no longer endure an adjustment in fuel prices in a company that takes in tens of billions annually.”

According to Petrobras, considering the mandatory blend of 90% diesel A and 10% biodiesel for the composition of diesel sold at service stations, Petrobras’ portion in the price to consumers will go from R$4.06, on average, to R$4.42 for each liter sold at the pump. A variation of R$0.36 per liter.

The readjustment of R$0.40 made by Petrobras was still below the gap compared to the prices of importers.

According to Abicom (Brazilian Association of Fuel Importers), the diesel price charged in the domestic market is lagging, on average, R$0.94 per liter. Thus, the readjustment of the oil company was about 57% lower than a change that followed the PPI (Import Parity Price).

In a statement, Petrobras justified the increase by saying that the global diesel balance is impacted by a reduction in supply relative to demand. Global stocks are below the seasonal lows of the past five years in the main supplying regions.

“This imbalance has resulted in diesel prices rising worldwide, with the appreciation of this fuel far above the appreciation of oil. The difference between the price of diesel and oil has never been so high,” the company said in the statement.

FUEL PRICES BECOME THE SUBJECT OF DISPUTE

In the run-up to the election dispute, former President Luiz Inácio Lula da Silva (PT) said he would end PPI. “It is important that the shareholder receives his dividend when Petrobras makes a profit, but I cannot enrich the shareholder and impoverish the housewife,” he wrote on Twitter in early February.

The number of Brazilian families in extreme poverty registered in the country’s CadÚnico (Unified Registry) will increase by 11.8% by 2022.

But not only has the impoverished population increased in Brazil. Just a few days ago, it was announced that more than 50% of all households in the country must now be considered poor.

Often they are working poor. They maybe have a house, a car, furniture – all on credit – but they can no longer drive around and eat only the cheapest food, if at all regularly.

In vast Brazil, where there is no public transport to speak of, most people are dependent on driving. Therefore, the level of gasoline and diesel prices has a decisive impact on the family budget.

In addition, more than 90% of food distribution is done by truck. The rising diesel prices are charged separately by the transport companies to the supermarkets and then passed on to the end consumer in further price increases.

In this sense, the pricing policy of Petrobras is, to a significant extent, complicit in the massively increasing price of basic foodstuffs in Brazil.

According to a poll conducted by PowerData between April 24 and 26, 67% of the Brazilian population supports government intervention at Petrobras to lower fuel prices.

The price adjustments have a strong impact on the economy and have been criticized by President Jair Bolsonaro, who called the company’s profit “rape“. In the first quarter, the company recorded a profit of R$44.5 billion. It was the highest profit recorded in the period among the major oil companies in the world.

With information from Poder360