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Fuel prices (Brazil): what really matters?

image credit: Rafael Herzberg

Fuel prices: what really matters?

The impression of those who follow the news is that Petrobras' policy - of pegging its prices - to international quotations would be the great villain of the price at pumps being so high.

Of course, the local currency (Real) is devalued and the price of fuels on the international market is currently very high. Combining these two factors, part of the increase in domestic prices here in Brazil is explained.

But is this really what is making a difference?

In my analysis, the answer is NO! The central theme is the total tax burden on fuels, of close to 50% (yes you read it correctly!).

A successful solution would be to lower the tax burden with the counterpart of the Federal, State and Municipal Governments to make a reduction in their expenses - in the same size.

The thesis is simple. The challenge would be to motivate our politicians , Mayors, Governors and the President do the necessary "cleaning". But tradition points to an easier solution: find a culprit and fire him/her.. We, Brazilians, accept very well this type of "attitude".

Rafael Herzberg's picture

Thank Rafael for the Post!

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