How would Brazil rank in the cheapest gasoline in the world after readjustment – 02/03/2023 – Market

The increase in the price of gasoline projected by the Brazilian government could cause the country to drop more than ten positions in the ranking of the cheapest gasoline in the world.

According to the weekly ranking prepared by the Global Petrol Prices website, Brazil is now the 29th country with the cheapest gasoline in the world, with an average price of R$ 5.07 per liter. With the changes announced this week, Brazil would fall to at least 42nd in the ranking — considering only the change in the price practiced in the country with the reenactment announced by the federal government.

Brazil is undergoing a reformulation of policies related to the price of oil. Last year, the government of then-president Jair Bolsonaro (PL) had cut taxes on fuel prices — something that many in the opposition accused of being a merely electoral measure, which the government at the time denied. The justification given was to help contain the escalation of inflation.

This week, the government of Luiz Inácio Lula da Silva (PL) announced the re-encumbrance of gasoline. With taxes back, gasoline will cost R$ 0.47 more per liter; and ethanol, R$ 0.02.

But, on the same day of the announcement, Petrobras announced that the price of gasoline at distributors will drop by R$ 0.13 – from R$ 3.31 to R$ 3.18.

As a result, the total effect of the price changes announced by the government and Petrobras will be an increase of at least R$ 0.34 per liter.

It is important to point out that these prices quoted are those practiced in sales to fuel distributors.

The final impact of recharging at the pump may vary across the country, depending on production costs and distributors’ profit margins.

In addition, service stations are free to set the prices charged to the final consumer, which means that the impact on the pump can be even greater.

More expensive than Argentina and USA

Considering only this change, according to the Global Petrol Prices ranking, the average price of gasoline would go from R$5.07 per liter to at least R$5.41. Brazilian gasoline would become more expensive on average than that of countries like Argentina (R$ 5.084) and the United States (R$ 5.129).

The list is compiled by the Global Petrol Prices website, which is maintained by experts in energy prices.

This assessment is based only on the most recent data published by the platform, which refer to Monday (27). These data may change throughout the week in all countries, which may influence the position that Brazil occupies in the list.

The ranking is affected by several factors – such as changes in the international price of oil, changes in energy and tax policies in each country and exchange rate variations.

Last year, when the Bolsonaro government announced the exemption of gasoline, Brazil rose 37 positions —from the 76th cheapest gasoline to the 39th— and was among the ten countries where the price of a liter of fuel was the lowest between June 27th and 29th. of August.

Prices paid by consumers around the world for a liter of gasoline vary widely – from R$0.083 in Venezuela (the country with the cheapest gasoline in the world) to R$15.406 in Hong Kong.

Among its neighbors, Brazil has more expensive gasoline than Venezuela, Bolivia, Colombia, Suriname and, now, Argentina and Guyana. The cheapest gasoline among Brazil’s neighbors is from Uruguay: R$1,841—a level similar to countries like the United Kingdom, Germany and Sweden.

The government announced that it will continue not to tax diesel until 2023. And Petrobras announced that diesel will have a reduction of R$ 0.08 (from R$ 4.10 to R$ 4.02).

The change would not change the country’s position much in the Global Petrol Prices ranking for the cheapest diesel in the world – it would go from 63rd to 62nd, overtaking El Salvador.

The Brazilian government is striving to prevent diesel from becoming more expensive, with fears of a repeat of a truck driver stoppage like the one that happened in 2018. The crisis ended up overthrowing the then president of Petrobras, Pedro Parente, in the government of Michel Temer (MDB).

The announcement of the fuel increase represented a victory for Fernando Haddad (PT), who was under pressure from PT leaders against the return of taxes.

The fear of the government’s political wing is that the rise in fuel costs will affect the government’s popularity right from the start.

Haddad defended an immediate return of these taxes on the first day of the Lula administration, due to the need to reinforce the Union’s cash to cover the increase in social spending and reduce the gap in public accounts, projected to close the year at more than R$ 200 billion .

However, pressure from the government’s political wing had already led to the extension of the exemption for diesel and cooking gas until the end of the year and for gasoline and ethanol until February.

This text was originally published here.