Brazil’s diesel pricing policy reveals a paradox: low pump prices conceal high real costs for the nation.
Since Petrobras abandoned the Import Parity Price (IPP) Policy in May 2023, adopting the so-called “Brazilianization” of prices, a new dynamic has been established in the fuel market. The promise that Brazilians would pay less for diesel, justified by national oil production, gave way to less transparent pricing criteria, more subject to political convenience. This change, which initially seemed beneficial, now exposes a hidden cost to the economy.
While international oil prices remained stable, the impact of this new policy was not directly felt by consumers. However, with the recent surge in crude oil prices above US$108 per barrel, the disparity between the market price and the price practiced by the state-owned company has become stark.
Data indicate that the cost of importing diesel at refining centers like Paulínia exceeded R$7.00 per liter in September, while Petrobras sells it domestically for approximately R$3.30, less than half the cost. This disparity raises serious questions about the sustainability of the model and the future of supply.
The Cost of Replacement and Rationing
The claim that Petrobras, responsible for about 70% of the market, can offer lower prices ignores a fundamental economic principle: the price of a good is defined by its replacement cost. Since Brazil imports between 27% and 30% of the diesel it consumes, the last liter needed to meet demand comes from the international market, with its corresponding price.
No private importer operates at a loss, selling a product for R$3.30 that costs R$7.00. This artificially low pricing, instead of resulting in sustainably more accessible prices, leads to rationing. In March, Petrobras was already limiting deliveries to previously contracted volumes, signaling the difficulty in meeting demand with outdated prices.
The Reality at the Pumps and Fiscal Subsidies
Official figures paint a clear picture of this distortion. While Petrobras kept its prices virtually unchanged between January and September, the price of S10 diesel at the pumps jumped from R$5.78 to R$6.59 in the same period, reaching an average of R$6.97 in the second week of September, according to the ANP. The price discrepancy did not translate into savings for the end consumer, but rather into reduced profits for the state-owned company or hidden costs for the sector.
Concurrently, the National Treasury bears a subsidy of R$2.12 per liter of diesel. However, this amount does not fully reach the consumer but rather benefits Petrobras‘s cash flow, mitigating accounting losses and improving financial indicators such as the crack spread.
A recent adjustment, where the state-owned company increased the price of diesel A by R$1.00 and applied an identical discount via subsidy, resulted in a net-zero effect, demonstrating that taxpayers are, in practice, financing the maintenance of artificially low prices.
The Uncertain Future: Risk of Shortage or Return to Billions in Losses
The current scenario presents two worrying outcomes. The first is an imminent diesel shortage. With Petrobras limiting its quotas and imports, dependence on private importers increases. These, in turn, operate under the constant risk of new price interventions, which could lead them to withdraw from the market, creating a supply vacuum with the potential to paralyze essential sectors.
The second alternative harks back to the “Dilma era,” where, to avoid shortages, Petrobras was forced to import fuels at high prices and sell them below cost. This policy generated billions in losses, record indebtedness, and harm to shareholders, including the Federal Government. The decision to link the price of an essential commodity to political decisions, made in 2023, has trapped the country in an economic predicament, with the real risk of a diesel supply collapse, something already being felt in some southern regions, once again demonstrating how government intervention negatively impacts the economy and taxpayers.
