Cheaper diesel: understand Petrobras’ 1st decision under Lula’s management

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Petrobras decided this Tuesday (7th) to reduce the price of a liter of diesel oil to distributors by 40 cents. This was the first decision on prices taken with the participation of the new president of the oil company, former PT-RN senator Jean Paul Prates.

The decision-making process and justifications, however, resemble the discourse already adopted by Petrobras since 2016, when import parity was instituted in the amounts doubled by the company. But there is something beyond the rule.

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In the statement, the state-owned company states that the decision to lower diesel prices had “as the main guideline the search for the balance of Petrobras prices in the national and international markets, contemplating the main supply alternatives for our customers and the market share necessary for the optimization of assets”.

There are two factors behind this, one political and economic and the other seasonal. The first is the reduction, in recent days, of the price of a barrel of oil, which had risen at the end of last year.

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The highs were motivated by a risk of problems with the global supply of oil because of the war in Ukraine. The predicted crisis did not materialize and the bullish scenario cooled down.

There is also the aspect related to the climate. The big fuel consumers are located in the northern hemisphere, which comprises the European continent and the United States.

When winter arrives in these places, diesel consumption skyrockets. The fuel is used to heat homes, schools and businesses. As the season progresses, demand drops and the price ends up decreasing. That’s what’s happening now, about 40 days before the end of the season.

The process is the opposite of that of gasoline, which has skyrocketed consumption in the summer of the northern hemisphere, with greater use of cars for long journeys, the American ‘driving season’, or ‘steering wheel season’.

The reduction that takes effect this Wednesday (8), may, however, be reviewed soon. In addition to external factors, there are internal triggers for price changes.

The main one is demand. There are times of the year when trucks are more in demand to transport grain and cargo. In the first quarter, the peak is in the month of May, with the second crop of grains such as soybeans, which we cultivate freely in the summer.

The demand curve starts to rise already in March, which can cause a greater rush to fuel stations and put pressure on the domestic market, forcing an increase in prices.

The expectation of the PT management in the country and at Petrobras was to change the fuel pricing policy before a new shock in the national and international markets. But there won’t be time.

Although Prates has already taken over the company, the new president’s forecast is to swear in directors and directors only in April. Until then, it is very difficult to make a structural change in Petrobras’ pricing policy – ​​which today is based on import parity.

There will also be no time to curb an expected increase in the value of a liter of gasoline, whose exemption from federal taxes (Pis/Pasep and Cofins) ends at the end of February.

How Petrobras sets prices

Petrobras’ pricing policy establishes that the amounts charged to distributors by refineries must be in line with the market. If it charges too cheaply, Petrobras makes imports unfeasible and, consequently, cannot supply the domestic market, because it is not self-sufficient in refining, that is, it does not supply all the country’s fuel needs.

But if it charges too much, Petrobras loses market share to importers, reduces its market share, and ends up incurring losses.

To calibrate this, the oil company produces daily market reports, which are subsidies for decisions on increases or reductions.

These documents take into account four main factors: the global economic situation, the price of oil, the exchange rate between the real and the dollar, and domestic demand.

This is precisely why Brazil has seen a real rise and fall in prices in recent months: the global economy made the exchange rate very volatile and the war left the price of oil unstable.

A CNN found that international analysts heard by the state-owned company’s price decision makers place another determining factor for fuel pricing in the perspective of the future: China.

Their assessment is that the Chinese economy is ‘hibernating’, largely due to the impacts of Covid-19. But that must change. In their account, the scenario would change between 3 and 6 months, looking forward.

With China at full power, oil should be much more in demand, increasing demand and, consequently, forcing prices to rise.

Decision-making regarding price changes at Petrobras has three main actors: the Commercialization and Logistics director, the Financial director and the company’s president.

This triad is what hits the hammer on increasing or decreasing amounts charged for petroleum derivatives (gasoline, diesel, kerosene, asphalt, natural gas, etc). The decision may come from a sequence of meetings or simply from an exchange of e-mails.

Source: CNN Brasil

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