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Impact of fuel prices contention in Brazil and pricing mechanisms options

Author

Listed:
  • Edmar de Almeida
  • Patricia de Oliveira
  • Luciano Losekann

Abstract

Petrobrás was severely affected by the government’s fuel pricing policy. By meeting the increasing demand of LPG, diesel and gasoline, whose prices were below international reference, the company has lost R$ 98 billion in income from 2011 to 2014. In a period of high investments due the exploration of the Pre-salt, this loss raised Petrobrás debt and deteriorated its financial situation. Should full alignment with the international price be not politically feasible, the international experience suggests adopting stabilization fund as proper pricing mechanism. Political interferences in its management, however, should be prevented. JEL Classification: Q32; Q38; Q43.

Suggested Citation

  • Edmar de Almeida & Patricia de Oliveira & Luciano Losekann, 2015. "Impact of fuel prices contention in Brazil and pricing mechanisms options," Brazilian Journal of Political Economy, Center of Political Economy, vol. 35(3), pages 531-556.
  • Handle: RePEc:ekm:repojs:v:35:y:2015:i:3:p:531-556:id:238
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    More about this item

    Keywords

    oil products prices; Petrobras; pricing mechanisms; stabilization funds;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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