Why is the price of gasoline going down so much?  Understand the reasons |  the time

Why is the price of gasoline going down so much? Understand the reasons | the time

Petrobras announced on Monday (15) another Petrol price cut – a Only the third in August. The decrease in the amount drivers pay to fill up has been observed since July, when a liter dropped to R$7. Currently, depending on the city, fuel is already selling for less than R$5. But why is the price of gasoline decreasing sequentially?

The reasons are many. One of the main factors is ICMS cap, made possible by Supplementary Law 194. This initiative is part of a set of measures implemented by the Federal Government prior to the election period to curb the rise in fuel prices in Brazil. In practice, the rule has stipulated that the minimum rate to be levied in a state gasoline tax should be between 17% and 18%.

This procedure is also valid for telecommunications and electricity. In Minas Gerais, for example, the percentage that affects the final cost of gasoline decreased from 31% to 18%. In Sao Paulo, the rate set was the same, compared to the previously charged 25%. In addition to reducing the state tax, the law also eliminated the collection of federal taxes on gasoline, such as Cide and Pis Cofins.

In Minas, according to the calculations of the Retail Syndicate of Petroleum Derivatives of Minas Gerais (Minaspetro), the effect of Supplementary Law 194, as well as the reduction of ICMS and the zero collection of federal taxes, is represented by Final price reduced by 1.59 BRL paid by the consumer. But in addition to suggesting the federal government’s responsibility, the roughly 23% drop in the price of a barrel of oil on the international market between June and August also contrasts with the price paid by drivers in Brazil.

On June 15, the entry was sold at $118.51. This Monday (15) the price was $95.02. The interference of the external scenario in the amount paid by the Brazilians is justified Import Equivalency Policy (PPI) Petrobras uses it to price fuel in Brazil according to the prices applied in the international market, more precisely in the Gulf of Mexico.

Since 2016, when the proposal was implemented in the government of then President Michel Temer Gasoline price doubled in Brazil and did not result in a decrease in bombs. The most subtle impact of the PPI came in the first half of this year, when the war between Russia and Ukraine led to an imbalance in the prices of oil and its derivatives on the international market.

The drop below $100, which has been observed since the beginning of August, is linked to the global economic crisis, which ends up in the Brazilians’ favour. According to the Economist at the Social Petroleum Observatory, Eric Gil-Dantas, the situation may favor further cuts in the coming weeks. We had a response from most central banks pointing to inflation and interest rate hikes. This cools the savings. In Brazil itself there was a resounding increase, ”says the specialist.

Dantas, who is also associated with the Brazilian Institute for Political and Social Studies (Ibeps), says the situation in China, a major importer and one of the largest oil consuming countries, is also in favor of lower prices. If there is a decline in economic activity in China, it will affect prices. He adds that the problems experienced by the Chinese economy lead to a calming of the global economy and consequently a drop in oil barrels at the international level.

On Monday, the Brazilian Association of Fuel Importers (Abicom) reported that the reduction in the price of gasoline could have ended. Plus 0.18 BRL per liter announced by Petrobras. According to the entity’s International Fuel Price Report, the average price of gasoline in Brazil was 10% higher than in the Gulf of Mexico, reaching 14% at the Port of Suape in Pernambuco. According to Abicom, the drop could be R$0.33 per liter in the case of gasoline

Diesel does not accompany

Contrary to what happens with gasoline, diesel has not yet seen a sharp drop in price. The average price of fuel, which is the basis for road transportation of goods and passengers, was R$7.63 in July in Belo Horizonte and the metropolitan area. Last week, according to a survey conducted by the Mercado Mineiro website, the average price of oil was R$ 7.50, but it can be found for R$ 7.14.

In the assessment of economist Eric Gil Dantas, there is still a downside margin for the fuel. This is because, within Petrobras’ producer price forecast, the fuel is sold R$0.22 cheaper than it is practiced outside Brazil, according to APICOM calculations. “Petrobras is passing this on more slowly. There has to be pressure to make up for what was lost when diesel was sold below the PPI,” says the economist.

The report did not use data from the National Agency for Petroleum, Natural Gas and Biofuels (ANP) because the agency’s pricing system was downgraded due to an attempted hacker attack.

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