Wednesday, December 26th 2012 - 07:17 UTC

Fuel-price controls force Brazil to import 12bn dollars in oil and refined products

Brazil faces record trade deficits in petroleum products in 2012 and 2013 as a result of government fuel-price controls, problems with its refining system and rising consumer demand, the Folha de S. Paulo newspaper reported last weekend.

Plenty of oil but keeping fuel cheap for political reasons has its cost

Brazil's petroleum and refined products trade deficit will reach 11.8 billion dollars in 2012, the biggest since at least 1995, Folha said. The paper cited a report from Tendências Consultoria, a Brazilian economic-research company.

The year 1995 is the earliest period available in the trade database maintained by Brazil's commerce and development ministry, the paper said.

Tendências expects the petroleum and fuels deficit to rise 46% to 17.2 billion dollars in 2013.

State-controlled Petrobras, Brazil's only refiner and principal oil producer, will likely record a petroleum trade deficit of 9.8 billion, 30% more than in 2011, Folha reported, citing Tendências.

Brazil became a net exporter of petroleum in 2009, but government policy has helped slow oil development and undermine use of ethanol, which was, until recently, the most used fuel for passenger vehicles.

The deficits come despite the discovery of giant, new offshore oil reserves and billions in investment to develop them and expand output from exiting fields.

Brazil produced 2.45 million barrels of oil and natural gas equivalent a day (boepd) in October. About 91% of that was produced by Petrobras.

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1 Anglotino (#) Dec 26th, 2012 - 09:09 am Report abuse
Sounds like the perfect market for the Falklands to export to when the industry is fully up and running.
2 ChrisR (#) Dec 26th, 2012 - 12:39 pm Report abuse
These SA countries just cannot stop trying to buck the market.

Only Mr. Market knows what is going to happen and stunts like holding prices down artificially WILL blow up in Dilma's face.

The other problem, common in SA including Uruguay is the monopolistic position of the refiner.

I would put a lot of money on the fact that the refineries are not as efficient as any commercial operator elsewhere in the world.

And who is going to pay for the 11.8 bn USD? None other than everybody who pays tax, whether they have their own transport or not, pathetic really.
3 Captain Poppy (#) Dec 26th, 2012 - 01:48 pm Report abuse
Price controls have never worked anywhere and never will. Natural market forces will always prevail in one way or another. The USA's 70's energy crisis was largely the fault of price controls.

“Your America is doing many things in the economic field which we found out caused us so much trouble. You are trying to control peoples' wages and prices — peoples' work. If you do that you must control peoples' lives. And no country can do that part way. I tried and it failed. Nor can any country do it all the way either. I tried that too and it failed. You are no better planners than we. I should think your economists would read what happened here.”

Hermann Goering-Post WWII interview on rebuilding Germany
4 Anglotino (#) Dec 26th, 2012 - 08:08 pm Report abuse
A great comparison is Colombia's Ecopetrol. The Colombian government doesn't interfere in its oil industry as much as Venezuela, Argentina and Brazil do and for this reason the company is well run and profitable. It isn't sme bloated arm of a welfare state.

The market is not distorted and fuel subsidies have been reduced and I think eliminated. Petrol is more expensive than in the US.

It's also interesting that at one stage this year it was also bigger than Petrobas.
5 British_Kirchnerist (#) Dec 31st, 2012 - 01:13 pm Report abuse
#1 Except they'll find the market closed, unless we negotiate

#3 Why do you approvingly quote a Nazi, from an article written by a guy who wrote a book attacking Lincoln as a big stater and defending the position of the slaveowning South?!
6 Captain Poppy (#) Dec 31st, 2012 - 03:16 pm Report abuse
Well BK, I guess you will need to do some reseach on why then, if you are unable to deduce why and need to know. It's ashame that you feel knowledge only comes from one tree. If you re-read the quote....slower, you make get it. Increase the font size too.
As for his position on Lincoln and slves, that's meaningless and insignificant. Stay focused on the price controls.

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