Comparison of consumer prices in several countries
The price charged of the consumer consists of three parts: producer or importer realization, taxes and trade margins. In Brazil, this trade margin includes the gross gasoline distribution and retail service station margins.
In the graph below, it is possible to compare the gasoline prices Petrobras practices in Brazil to the average prices practiced in several countries. The "Refinery Realization" represents the refinery price without taxes; the "Gross/Distrib./Retailer Margin represents the trade margins, which vary based on the local fuel sales market; and the "Tax" part represents the tax burden, which is the most important factor that accounts for the price differences among the countries. It can be seen that the values charged in Brazil are in line with those of other countries that have open and competitive byproduct markets.
Average 2017 (jan-nov)
Note: The amount of anhydrous ethanol in C-grade Gasoline was 27%.
Prepared by: Petrobras with data from the Central Bank, ANP, USP/Cepea and PFC Energy. Distribution and Retail Margins obtained by difference. Exchange rate considered = R$ 3,1839/$ (average daily PTAX in 2017).
Competing with Hydrous Ethanol and CNG, gasoline currently fuels about 60% of all passenger vehicles in Brazil. For this reason, it is important the consumer know how this product’s market operates, from the producer to end consumer, and be aware of how its price is established.
The Brazilian gasoline market is currently regulated by the National Petroleum Agency (NPA) and by Federal Law 9478/97 (the Petroleum Act). This act flexibilized the oil and natural gas sector monopoly, until then held by Petrobras, opening the fuel market in Brazil. As such, in January 2002, gasoline imports were released and the price went on to be defined by the market itself.
When the consumer fills his or her car’s tank up at a retail service station, he or she purchases grade “C” gasoline, a mixture of grade “A” gasoline and Ethanol. The gasoline the refineries produce is pure, ethanol-free. Distributors buy grade "A" gasoline from Petrobras' refineries and Ethanol from the mills (Petrobras holds stakes in some of them). They blend these two products are blended to formulate grade C gasoline. The proportion of Ethanol in this blend is determined by the Interministerial Sugar and Alcohol Board (CIMA), and can range from 18% to 25% pursuant to Resolutions.
Grade "A" gasoline (Ethanol-free) can be produced by Petrobras, by other refineries in Brazil, by formulators, by petrochemical plants or, also, imported by companies authorized to do so by ANP. Sold to the several distributors that operate in Brazil, grade “A” gasoline is then mixed with Ethanol, resulting in grade “C” gasoline. This, in turn, is sold to consumers through thousands of service stations spread throughout Brazil.
The price that Petrobras practices to market grade "A" gasoline to distributors can be represented by the sum of two components: the share of the amount of Petrobras' product and taxes, which are levied by states (ICMS1) and the Union (CIDE2, PIS/PASEP3 and Cofins4).
In most States, ICMS is calculated based on an average weighted price for the final consumer (AWPFC), which is updated fortnightly. This means that the price at the retail service stations can be changed without any change having been made to the price Petrobras is responsible for.
At the price the consumer pays for grade "C" at the service station, in addition to the taxes and Petrobras' share, also included is the cost of Ethanol (which is set freely by its producers) and the distributors' and stations' costs and marketing margins.
By understanding that the gasoline pricing chain is composed of several different parts, it is easy to realize that any change made to at least one of them will reflect, upwards or downwards, in the price "C" grade gasoline consumers will pay at the pump. As it turns out, Petrobras only controls a portion of the final price to the consumer, represented by the price at its refineries without taxes.
There are cases in which Petrobras does not participate in the product’s trade chain, such as in the case of imported gasoline, or when it is produced by an agent other than Petrobras.
The NPA monitors the prices practiced by service stations all over the country via weekly surveys. The results can be checked out at the Agency’s website (www.anp.gov.br).
More information is available via e-mail, at email@example.com or by phone, by dialing 0800 728 9001.
1. Value-Added Tax on Services and Circulation of Goods - State Tax
2. Contribution for Intervention in the Economic Domain - Federal Tax
3. Social Integration Program / Public Service Employee Savings Program - Federal Taxes
4. Contribution to Social Security Funding - Federal Tax
The ICMS includes the part referring to the Tax Substitution, which is the value Petrobras collects for the sales operations from the distributors to the retail gas stations and from the stations to the final consumer.