Is gasoline expensive? – 03/01/2023 – Vinicius Torres Freire

Fuels have been a politically explosive subject at least since the 2018 truckload, when the country nearly came to a halt because of truck drivers’ strikes and lockouts by transport companies. Is gasoline or diesel so much more expensive now than it was in the last 10 or 20 years? Not in the case of gasoline. More on that later.

The discussion of Petrobras prices causes intense anger and leads politicians to adopt or suggest measures of very low technical quality that cause social inequality and environmental damage. The return of collecting part of the federal gasoline tax has angered many people.

This journalist, for example, wrote in these columns some defenses of the readjustment, of the so-called reencumbrance. The tax stolen by Jair Bolsonaro in order to take votes in the 2022 election will end up with a revenue that is needed for the depleted government coffers. Furthermore, it was a subsidy for polluting fuels and the measure did not benefit the poorest half of the country, at least. It was a source of fury.

As happens a few times a year, I received hundreds of hate messages, threats, death sentences and wishes that my daughter would be raped (sic), among other manifestations of esteem and consideration, by email and various social networks, which also were invaded by the digital militias.

But the subject here is the price rage. Gasoline and diesel have become so much more expensive?

One way of measuring the relative weight of fuels in the family budget is to calculate the purchasing power of wages in terms of gasoline and diesel, for example. It doesn’t tell the whole story of economic hardship, but it’s a starting point.

For example, a current minimum wage buys more gasoline than it did between 2001 and 2017, overall. Between the end of 2017 and the beginning of the epidemic, it bought much less, with a pronounced drop in mid-2018. This gasoline purchasing power dropped to the lowest levels since 2009 between mid-2021 and mid-2022, when the government of darkness lowered taxes.

When the comparison is made with average income from work (“salaries”), according to data from the IBGE Pnad, the story is similar. The purchasing power of the average salary in terms of gasoline is close to the average level seen between 2012 and 2018 (and should remain so even if the entire tax increase is passed on to the price at the pump).

One piece of data of interest is that the purchasing power of fuels (diesel and gasoline) was at its highest level during the big drop in oil prices, in mid-2020. The contrast with 2021 was sharp. That may explain part of the revolt.

The case of diesel is different. At least measured in terms of wages, diesel is much more expensive than the average from 2012 to 2020 (pre-pandemic), just cheaper than in the years 2002-2006 — and the economic impacts of the high diesel prices are very more range. In recent years, there have been major problems in world diesel production. Speaking of which, the current government has not re-charged diesel.

There must be more reason for revolt, in addition to the fact that “polarization” has also reached the station pumps. For almost a decade Brazil has been in economic collapse. Income (GDP) per capita in 2022 was still the same as in 2011.

Real average wages (inflation discounted) recovered after the epidemic, but are still at the same levels from 2017 to 2019. Years of crisis, business failures and unemployment have shaken wages, assets and entire lives. The poorest half of the country, which does not buy gasoline, suffered even more.

Still, the gasoline revolt is hard to explain, not least because food has gone through terrible waves of inflation.

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