A liter of S-10 diesel, the fuel that powers Brazil's trucks, buses and pickups, averaged R$ 7.13 at pumps across the country this week, up 2.3% from the week before. It is the highest price since the end of May, according to the weekly survey released on Friday (18) by ANP, Brazil's national oil, gas and biofuels agency. For drivers, that works out to about R$ 0.16 more per liter.
Filling the 40-liter tank of a pickup now costs close to R$ 285. For a truck with a 300-liter tank, a fill-up runs to R$ 2,139, roughly R$ 48 more than last week. Because nearly all cargo in Brazil moves by road, diesel prices feed into freight costs and, in time, into store prices.
Why the price rose
The increase comes as the federal diesel subsidy began to be phased out this week and as oil and refined products surged on international markets, g1 reported. The current benefit, R$ 1.12 per liter, runs until September 26. Diesel had been cheaper than gasoline between August 2 and September 12, a position it has now lost.
How it works: the subsidy, officially called a "subvenção econômica" (economic subvention), is money the government pays to fuel producers and importers to hold down pump prices; drivers never see the cash, it reaches the producer before the fuel gets to the station. On top of the benefit ending September 26, President Luiz Inácio Lula da Silva signed a provisional measure, a temporary law that takes effect immediately, authorizing an extra R$ 1 per liter for 30 days. With both in force, the aid totals R$ 2.12 per liter, nearly 30% of the current pump price.
The government's cushion
Petrobras, the state-controlled oil company, said it raised the price of diesel sold to distributors by R$ 1 per liter, but that a new federal subsidy of the same size offsets the increase, leaving its selling price unchanged. The government also published a provisional measure in the Official Gazette releasing R$ 6.6 billion for fuel production and import subsidies, R$ 5.6 billion of it for diesel. The money comes through an extraordinary credit, which sits outside the spending limits of Brazil's fiscal framework, the rule that caps public spending.
According to g1, the government describes the benefit as a form of "cashback" to offset the return of federal taxes on diesel, and blames the price pressure on the war between the United States and Israel against Iran, along with the Russia-Ukraine conflict. With the R$ 1.12 subsidy expiring on September 26 and the new one lasting only 30 days, what happens next at the pump depends largely on the price of oil.