Brazil's Diesel Prices Climb Up to 20% This Year Despite Federal Subsidies

Diesel prices in Brazil closed the first half of October with an average of R$ 6.94 per liter, 20.1% higher than in January, according to the TruckPag survey cited by the Jornal Portuario and Transporte Moderno outlets. The increase persists despite the federal subsidies currently in effect, which have review deadlines set after the runoff election.

The rise is putting pressure on trucking companies' operating costs, which, according to the National Association of Cargo Transport and Logistics (NTC&Logística), allocate an average of 35% of their expenses to diesel, a share that can exceed 50% in long-haul operations. The same organization reported in August a 10.5% gap between freight rates and actual transport costs, making it difficult for companies to pass the fuel price increase on to their rates. Kassio Seefeld, CEO and co-founder of TruckPag, noted that price stability in the first half of the month is not a relief, since diesel remains 20% more expensive than at the start of the year.

A separate report by the National Confederation of Transport (CNT), released by Mundo Logística, measured a 15.26% increase in diesel prices through September according to the Extended National Consumer Price Index (IPCA), driven by Brent crude trading around US$ 100. The same organization reported that lubricating oil rose 14.09% between January and September, while tolls increased 4.65% over the same period.

According to the Edenred Ticket Log Price Index (IPTL), cited by Transporte Moderno, common diesel averaged R$ 7.20 per liter in the first half of October, up 6.67%, while S-10 diesel rose 5.07% to R$ 7.46. The South region recorded the largest increases, with common diesel up 11.70% and S-10 up 7.50%, while the North maintained the highest prices in the country. Vinicius Fernandes, Business Unit Director at Edenred Mobilidade, attributed the volatility to the country's dependence on fuel imports.

The Brazilian government changed the diesel support mechanism several times during the year, according to Transporte Moderno: Provisional Measure No. 1,340 set a subsidy of R$ 0.32 per liter in March, MP No. 1,363 raised it to R$ 1.12 starting in June, and MP No. 1,391 enabled monthly adjustments starting in September. MF Ordinance No. 2,946 maintained a general benefit of R$ 2.12 per liter from September 27, while MF Ordinance No. 3,082, dated October 13, added R$ 1.40 exclusively for imported A diesel, allowing importers to receive up to R$ 3.52 per liter while both benefits remain in effect. Finance Minister Dario Durigan denied that the measure was linked to the election calendar, although the general benefit expires at the end of October, after the October 25 runoff.