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

Wednesday, December 26th 2012 - 07:17 UTC

Full article 6 comments

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

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.

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.

Categories: Economy, Energy & Oil, Brazil.

Tags: Brazil, oil price, Petrobras.

Top Comments

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Anglotino
Sounds like the perfect market for the Falklands to export to when the industry is fully up and running.
Dec 26th, 2012 - 09:09 am 0
ChrisR
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.
Dec 26th, 2012 - 12:39 pm 0
Captain Poppy
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

http://mises.org/daily/1962
Dec 26th, 2012 - 01:48 pm 0

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