Reducing fuel prices turns the government into an arm wrestling match

The Minister of Mines and Energy, Alexandre Silveira, and the president of Petrobras, Jean Paul Prates, are engaged in a public tussle over the reduction in fuel prices, one of the promises made by President Luiz Inácio Lula da Silva (PT) during the campaign. On the one hand, Silveira assesses that Petrobras can now lower prices after the fall in international oil prices, while Prates argues that this movement must be done with more caution to avoid volatility.

“There needs to be responsibility when lowering prices because ‘Brazilianizing prices’, as per President Lula’s guidance and his government program, requires that adjustments are not made piecemeal, day by day, as during the PPI era. [Preço de Paridade Internacional]”, stated the president of Petrobras in an interview with Folha de S. Paulo, published this Sunday (19).

He claims that during periods of high oil prices on the international market this year, Petrobras kept fuel prices stable. “The great virtue of Petrobras’ current commercial strategy is to provide stability and predictability. Anyone who touts things without this meaning, either does not understand how to make the mission given by the president viable, or is trying to create a crisis where there is none”, he continued.

The Minister of Mines and Energy, in turn, has been defending price reductions. On Friday, he said that the measure would be essential for the country to reach the inflation target.

“If we have the reduction, which is possible to do without any harm to Petrobras, any harm to the price it proposed to exercise, I am saying that it is above the internal competitive price… it contributes to the inflationary target”, he stated.

This Sunday, in an interview with Globo, he once again reinforced that Petrobras has a “social function”. He stated that he agrees with Prates on the issue of price volatility, but said that this cannot be the state-owned company’s only commitment. “I address my colleague Jean Paul with the deepest respect. But my respect cannot be contradicted by my commitment to making the country work and consequently we can reap the fruits of this economic success”, he declared to the newspaper.