price increase fuel It’s a global phenomenon, but the way consumers feel its effects varies between countries.
Oxford Economics, a consultancy, attempted to measure this difference by comparing the value of a liter of gasoline to the purchasing power of 30 countries, and calculating the share it represented in the income of local residents.
Brazil appears among the top three on the list. A liter of gasoline is equivalent to 9% of the average daily wage in the country, which is only lower than those recorded in the Philippines (19%) and Indonesia (13%).
In a report issued to clients, economists Marcos Casarin and Felipe Camargo drew attention to the fact that, even with successive increases, the price of fuel in Brazil is still 18% behind world prices.
So, if there is a file Petrobras Strictly follow the parity policy – which provides for the adjustment of domestic prices depending on the price of a barrel of oil and the exchange rate – gasoline may become more expensive until the end of this year.
The International Parity Price Policy (PPI) was set at Petrobras in 2016, when businessman Pedro Parente took over the management of the company, following allegations of corruption in the state-owned company.
In previous years, Petrobras subsidized the price of the fuel it sells on the domestic market. Between 2012 and 2014, the period when the mismatch between domestic and international prices peaked, the company gave up the equivalent of 5.5% of GDP in profits due to politics, according to Oxford Economics calculations.
Since October 2016, when the producer price index came into effect, the price of gasoline has grown by 57% in Brazil, after deducting inflation, and the value of the company’s shares has more than doubled, according to the consultancy.
Can you keep prices constant?
Gasoline averaged R$7,219 per week between April 10-16, according to data from the National Petroleum Agency (ANP).
However, maintaining the value at current levels at least until the end of 2022 may not be easy.
Among the alternatives to price stabilization, economists highlight two possible scenarios: 1) “costs” are absorbed by the SOE itself – that is, it gives up profit and keeps prices below par -; 2) The government intervenes in subsidies, either through the creation of a fuel stabilization fund or with resources from the budget itself.
By dropping new adjustments, Petrobras will give up the equivalent of 4.7% of GDP in profits, R$68 billion, calculated by Oxford Economics, taking into account WTI oil barrel price forecasts and the dollar. until the end of the year. The impact, in this case, will be mostly on the state-owned shareholders.
The stabilization fund, in turn, is a mechanism that countries such as the Dominican Republic, Mexico and Chile already have. It was defended by economist Adriano Pires, who even cited the presidency of Petrobras when he was president Jair Bolsonaro He decided to remove General Joaquim Luna e Silva from his post last March.
In this case, economists argue that such a fund will not be created in time by the end of this year, among other reasons because the president does not have enough support from Congress, which would need to pass a constitutional amendment to get it. off the ground.
Finally, to use resources from the budget itself to fund price stability, the government could break the spending cap (and risk being sued for a potential liability crime) or persuade parliamentarians to agree to a constitutional amendment to unlock the resources. Extraordinary in the budget.
In this latter way, the analysis says, the costs of the action will be more transparent, but the new flexibility of the spending cap could displease the market and further erode credibility regarding the sustainability of public accounts.
On the other hand, the text adds, “Allowing prices to rise may protect Petrobras shareholders and Brazil’s financial reputation, but it will limit the purchasing power of consumers, increasing the likelihood of strikes and demonstrations against the government. Only a few months away from the October elections.”
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