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After a Year of Successive Increases, Fuel Prices, Especially Gasoline, May Start to Decrease
According to data from IBGE, in the last 12 months, inflation in gasoline prices has exceeded 50%, while ethanol has been around 70%, and diesel has seen an increase of 49.56%. Thus, after being the most discussed topic throughout the year, the National Council of Fiscal Policy (Confaz) has frozen the Tax on the Circulation of Goods and Services (ICMS) applicable to fuel prices. The measure was taken in order to reduce the impact of gasoline prices on consumers’ budgets, as it directly and indirectly influences the price of all products, since one of the parameters used to determine the price charged is the cost of transporting goods.
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Consequences of the Frozen ICMS
Many believed that the ICMS value was the main factor in adjusting gasoline prices. However, it is necessary to consider the interaction with the global market, as the price charged for a barrel of oil varies according to the appreciation or depreciation of the dollar, being a more important factor for price setting than the tax itself.
The ICMS has been zero since November 1 and will remain this way until January 31, 2022, as a temporary measure by the Federal Government, while the depreciation of the real is not overcome. This latter factor, in turn, is the main cause of high gasoline prices, as evidenced by the minimal price reduction after the ICMS freeze.
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Gasoline with Fixed Pricing
Senators have developed a Bill aimed at fixing gasoline prices at an average of R$ 5.00 as a way to alleviate costs for consumers while keeping prices in line with the global market.
The Bill 1,472, authored by Senator Rogério Carvalho (PT-SE), aims to price gasoline, diesel, and also GLP (cooking gas), in addition to a tax on crude oil exports. The project has recently been approved in the Senate Economic Affairs Committee and may significantly reduce gasoline prices, given that in many cities the price is nearly R$ 8.00 per liter.
If the bill is approved, it will be forwarded to the relevant authorities for analysis, approval, and implementation. The Bill has five main objectives:
- Establish new guidelines for fuel commercialization;
- Introduce measures aimed at protecting consumers from internal and external price fluctuations;
- Determine that the formation of fuel prices considers average international price quotations;
- Establish a “band regime”;
- Create progressive export tax rates on crude oil;
- Create a stabilization fund financed by this tax.
Cheaper Gasoline in 2022
According to a survey by ValeCard, the outlook is that in the first quarter of 2022, gasoline prices will drop by 5.94%, being sold at an average price of R$ 6.18 in March – which is the lowest projected index.
However, starting in April, gasoline prices are expected to rise again, peaking in September. The fluctuations are due to market instability and the depreciation of the real because it is an election year.
