According to economists, the end of the import parity price policy (PPI) should cushion the impact of international fluctuations in oil and the dollar on the final value of fuels and on inflation. ), a new pricing policy. With the change, the state-owned oil company no longer uses the import parity price policy (PPI), established in 2016, as the only reference for the sale of gasoline and diesel to distributors. The measure fulfills a campaign promise by President Luiz Inácio Lula da Silva (PT), who had pledged to “Brazilize” fuel prices.
Hours later, Petrobras also announced a reduction of R$0.44 per liter in the average price of diesel for distributors, which went from R$3.46 to R$3.02. The average price of gasoline for distributors was reduced by R$0.40 per liter, from R$3.18 to R$2.78. The price of a 13-kilogram cylinder of gas for distributors fell, on average, by R$ 8.97. The transfer of these cuts to consumers depends, however, on distributors and gas stations.
According to economists interviewed by DW Brasil, Petrobras’ new pricing policy should cushion the impact of fuel prices on the national inflation index, the IPCA. According to experts, this does not mean, a priori, a direct interference by the government in the prices of diesel and gasoline, but a cushioning of the impacts of international variations in the price of oil and the dollar in the population’s consumption basket.
Gasoline over BRL 8
In the PPI regime, implemented during the government of President Michel Temer (MDB), fuel prices were basically linked to international quotations and freight costs, which could also change with exchange rate fluctuations.
In six years of international parity, the average liter of gasoline was R$ 3.66, in October 2016, up to R$ 5.51 in the last month, according to data from the National Agency of Petroleum, Natural Gas and Biofuels of Brazil (ANP). The high, of around 50%, was greater than that of the IPCA in the period, of 40%. In addition, the liter reached more than R$ 8 during some months of 2022.
According to economics professor Breno Roos, from UFRN, the PPI policy was incorporated into a principle of market opening defended by previous governments, which also included the sale of refineries, for example. As a result, prices sold at Petrobras refineries were practically the same as at private refineries, since oil production in Brazil was not taken into account.
“It was as if Brazil were a country with no oil, which imported everything. The result of this was that, when there was a shock abroad, in the most critical period of the pandemic, when oil exceeded 110 dollars, we imported inflation, fully passing on the cost of derivatives on the international market and the devalued exchange rate”, says Roos , adding that the current Central Bank interest rate policy, which is criticized by the federal government, was a direct consequence of fuel price shocks.
For him, Brazil is in the international middle ground of oil-producing countries in terms of pricing. While “petrostates”, such as Saudi Arabia and Venezuela, for example, subsidize fuel and sell it below production cost, the Brazilian company combines profitability with reference in the international market.
The United States, the country that is the largest oil producer in the world, uses the PPI, but the rule is justified by the country’s competitive market. “There are more than 2,000 refineries there, which are large, sell abroad and compete with each other”, he says. Brazil, in turn, has 17 oil refineries, with 13 of them belonging to Petrobras.
New parameters
In the communiqué on the new commercial strategy for diesel and gasoline, Petrobras says that it will take into account, from now on, references such as the “customer alternative cost” and the “marginal value for the company”. According to the state-owned company, the first point takes into account the “main product alternatives or substitute products”, that is, the value of gasoline and diesel in non-Petrobras refineries or even ethanol and biofuel in plants.
The marginal value of the company, according to Roos, signals the implementation of a regional strategy, which may even lead to the charging of different prices in different regions, according to the location. “It may be that, in a region, it prefers to import rather than sell”, he says.
“It is an interesting perspective, because it brings a reality of the market, competitiveness and profitability to the company”, points out economics professor Cristina Helena Pinto de Mello, from the Escola Superior de Propaganda e Marketing (ESPM). According to her, the implementation of the PPI, which tried to prevent price interference by the government, ended up creating a rigidity of rules, with volatility. “We need to see how this new policy will be operationalized. But, given the current composition of the board and the profile of the presidency, I believe it will be a healthy rule”, she adds.
Public coffers and basic interest
On the other hand, during the term of the PPI, Petrobras had record profits, which were distributed to shareholders through dividends. The results jumped from a loss of BRL 14.8 billion in 2016 to a profit of BRL 188.3 billion in 2022. Last year, BRL 215.7 billion were distributed to shareholders.
Part of this value returned to the federal government treasury, which is the main shareholder of the state-owned company, with about 36% of the shares. However, according to Roos, this policy, from a macroeconomic point of view, ended up becoming a “shot in the foot” by the government itself. “If the company paid a lot of dividends to the government, but [os valores dos combustíveis] put a lot of pressure on inflation, the way in which the Central Bank acted forced it to raise interest rates. This increases the cost of debt and requires a very large fiscal effort, slowing down the economy”, says the UFRN economist.
For Mello, from ESPM, the flexibility of the state-owned company’s new price rule does not imply a reduction in profit. With the PPI, she adds, substitute products, such as ethanol, can become more competitive than gasoline, for example, causing a reduction in demand. “Often, a price reduction [da gasolina e do diesel] may be accompanied by a more significant increase in sales, with a better result. Furthermore, if there is an impact on the IPCA, this creates space for interest rate reductions, and this brings relief to public accounts,” she says.
The reduction in the IPCA, however, will depend on the impact that the return of tax collection such as the state ICMS, which was withdrawn during last year’s election campaign, will have on prices. Furthermore, says Roos, the new pricing policy will not necessarily mean that Petrobras will dam up possible new oil shocks in the international market.
“But the company will end up smoothing out these transfers from the international market, because most of its costs are in reais. It can do that”, says the economist. “Now, very serious shocks will have to be passed on, also because the company has several governance rules, it is listed on the Stock Exchange. What happened in 2014 will not be possible, with the price of oil above 100 dollars and gasoline at R$ 2 ”, he concludes.
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