After Bolsonaro Exempts PIS and Cofins, Diesel Prices Rise Again and Gasoline and Ethanol Become More Expensive

The Price of the Most Used Fuel in Brazil, Diesel, Hit R$ 4.274 Per Liter at the Pumps; Gasoline and Ethanol Also Increased

After five consecutive drops, the average price of diesel at gas stations in Brazil rose slightly. Last week marked the first increase since the implementation of a federal government subsidy program for producers like Petrobras and importers. According to ANP data from last Friday, the price of gasoline and ethanol also saw an increase.

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The slight increase in price occurred despite the efforts of the Bolsonaro government, which included tax reductions, to lower prices and address demands from truck drivers after a historic highway shutdown in May against rising fuel costs.

The National Agency of Petroleum, Natural Gas and Biofuels (ANP) also recorded an increase in gasoline, which rose by 1.8% over the week, or 10 cents, to an average of R$ 5.592 per liter.

Meanwhile, ethanol, a competitor to gasoline at the pumps, increased by 1.5%, to an average of R$ 4.184 per liter, during a period marked by the off-season for sugarcane.

On Saturday (20), there was a reduction of about 5% in the price of gasoline at its refineries, the first of 2021. Diesel will not see changes. This move partially followed the drop in oil prices on the international market and the retreat in the dollar’s exchange rate against the real.

With the new adjustment, the price of gasoline at the state-controlled refinery has now risen by 46% in 2021, while diesel has increased by more than 40% during the same period. However, prices at gas stations do not necessarily reflect refinery adjustments and depend on various factors, including distribution and resale margins, taxes, and the mandatory addition of biofuels.

Ethanol Price Evaporates at Mills, and Distributors Are Burning Stocks

Ethanol consumption is suffering the consequences of stricter restrictions in fighting the pandemic. Additionally, the harvest in the Center-South officially begins on April 1, which limits business as distributors are waiting for a greater supply of the biofuel.

The sector is now hoping for good news from abroad since domestic lockdowns or semi-lockdowns will coincide with a greater supply arriving from the harvest in the Center-South. Even though the handbrake is being pulled on ethanol and peak production begins in May, the volume available still dampens prices.