government celebrates fall, but drivers still complain

The drop in gasoline and diesel prices in recent weeks, following federal and state tax cuts, has been used by President Jair Bolsonaro (PL), members of the government and his supporters to try to boost the reelection campaign. The perception of drivers heard by the UOLhowever, is that despite recent relief, prices are still high.

Why are prices falling? The drop came in the wake of the approval in Congress, with support from the Bolsonaro government, of a law that limited the collection of ICMS (Tax on Circulation of Goods and Services) in states to 17% or 18%. The maximum amount applied depends on the percentage charged, in each state, for items considered essential. The limitation covers gasoline, aviation kerosene, diesel, anhydrous alcohol and hydrated alcohol.

With the law, the states and the Federal District began to reduce ICMS. Even so, 11 states and the Federal District filed, at the end of June, an action in the STF (Supreme Federal Court) against the limitation of the tax.

What else helps to lower prices? With the law passed in June, the collection of federal taxes on gasoline and ethanol by the end of 2022 was also zeroed. of Intervention in the Public Domain).

An earlier law, from March this year, had already zeroed federal taxes on diesel and cooking gas.

What was the impact on prices? Tax cuts impacted prices at pumps. According to the ANP (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis), the average price of regular gasoline in Brazil went from R$7.39 a liter in the week ended June 25 to R$6.49 a liter in week ending July 9 (already under the law, which was enacted on June 23). The drop was 12.2%.

In the case of diesel, the average price went from R$7.57 to R$7.52 in the period, a much smaller drop of 0.66%.

Was the fall enough? Data from the ANP itself indicate that, despite the recent drop, fuels remain at levels much higher than those seen in previous years. The graphic below shows this:

In it, it is possible to see that, before the pandemic, both gasoline and diesel had lower prices than the current ones.

At the end of 2019, for example, the average price of a liter of gasoline was R$4.56. The average value of diesel was R$ 3.75.

So, even with the reductions in recent weeks, today the liter of gasoline is still 42.3% more expensive than seen at the end of 2019. The price of diesel is 100.5% higher – in practice, it has doubled.

How the government politically uses the fall in prices? The drop in fuel prices in recent weeks, especially gasoline, has been highlighted by President Bolsonaro and his supporters.

On July 14, Bolsonaro drew attention on Twitter to the reduction in fuel prices and electricity bills — another expected effect of the law’s approval in June.

Before that, on July 10, the Minister of Mines and Energy, Adolfo Sachida, tweeted that a liter of gasoline was at R$5.89 at a gas station in Brasília. At the site, according to him, the fuel cost R$ 7.70.

On the internet, images of a Bolsonaro supporter in Pernambuco wasting gasoline after falling prices also echoed.

consumers are satisfied? The perception of consumers heard by the UOL in Brasília is that the recent drop in fuel prices brought relief to the budget, but prices remain high.

Lawyer Gabriela Lustosa fills up her car at a gas station in Brasília, in the Federal District

Image: Fabricio de Castro/UOL

“The drop is positive, but of course it could fall further”, says lawyer Gabriela Lustosa, who says she has noticed the drop in gasoline prices in recent weeks. “I fill up almost every week, because it’s a family car, which everyone uses. We spend more than R$ 2,000 a month”, she says.

The doctor Juliana Ferreira celebrates the fall.

Doctor Juliana Ferreira fills up her car once a week, in Brasília - Fabrício de Castro/UOL - Fabrício de Castro/UOL

Doctor Juliana Ferreira fills up her car once a week, in Brasília

Image: Fabricio de Castro/UOL

“It was good for me, because I usually fill up once a week”, he says. “But it’s still very expensive. We’ve gotten used to the higher price. The price has dropped, but it’s still very expensive.”

What will be the electoral effects? By acting to reduce fuel prices, the government base is trying to increase the popularity of Bolsonaro, who appears in second place in polls, behind former president Luiz Inácio Lula da Silva (PT).

Will Bolsonaro get more votes? Political scientist Rafael Cortez, a partner at Tendências Consultoria Integrada, says that the drop in fuel prices, along with measures such as the increase in Auxílio Brasil (from R$400 to R$600 by the end of 2022), should have “a important electoral effect”.

For him, the tendency is for Bolsonaro to gain a few percentage points in the electoral race.

What will be the consequence? Cortez recalls that, according to the most recent polls, few percentage points separate Bolsonaro from being able to take the dispute against Lula to the second round.

The latest Datafolha poll, carried out between June 22 and 23, showed Lula with 53% of valid votes (those that exclude whites and nulls). Bolsonaro had 32%, while Ciro Gomes (PDT) added 10%. The margin of error is plus or minus two percentage points.

In this scenario, by winning over voters with measures to lower fuels, Bolsonaro reinforces the possibility of holding a second round.

“The power of the president’s pen, to launch measures that directly affect people’s lives, is one of the elements that helps explain what is most likely right now, which is a two-round election,” says Cortez.