Page 4 - LatAmOil Week 19 2022

COMMENTAR
LatAmOil COMMENTARY Y LatAmOil

Bolsonaro, shown on April 21 (Photo: Twitter/@jairbolsonaro)
The energy factor in

Brazilian elections

Fuel prices and the possible privatisation of Petrobras are likely to

come into the spotlight as Bolsonaro seeks re-election this October

BRAZILIAN President Jair Bolsonaro has had re-election later this year. He has not been poll-
to confront a number of major challenges related ing well against his main opponent – former
WHAT: to the energy sector over the last two years. President Luiz Inacio Lula da Silva, a leftist who
Rising world oil prices The most prominent of these was proba- is on the other end of the political spectrum
are forcing Bolsonaro bly the coronavirus (COVID-19) pandemic, from him – and therefore he needs every vote
to confront yet another in which the twin collapse of global demand he can get.
economic challenge. and prices for crude oil and natural gas led to a
considerable slowdown in production growth. Why Bolsonaro pays attention
WHY: However, Bolsonaro has also had to contend For example, he cannot afford to lose the sup-
The stakes are high, as with the impact of the drought that emerged in port of independent truck drivers, who have
the president hopes to be 2020-2021, drastically reducing the country’s been among his main backers in the past.
re-elected in October. hydropower generating capacity and forcing it And since these truckers are directly affected
to import additional gas by pipeline and tanker by higher diesel fuel prices stemming from the
WHAT NEXT: to cover domestic demand. rise in crude oil prices, he has repeatedly badg-
Bolsonaro and Lula may He is now facing another major challenge – ered the national oil company (NOC) Petrobras
end up sparring over the
proposed privatisation of namely, containing the economic impact of the about its policy of selling petroleum products at
Petrobras. rapid increases in world crude oil and wheat rates that are in line with global market trends.
prices that have followed the Russian invasion He has also made his displeasure over Petro-
of Ukraine in late February. The bull market for bras’ moves to exercise its right to independence
these commodities has already lifted the cost from state control by exercising his own prerog-
of basic goods and services around the world, ative to dismiss the government-owned compa-
and it is not clear how long or how extensive the ny’s CEOs after they have rebuffed his requests
increases will be. Brazil has not been immune for fuel price relief.
to the price rises, and Brazilian consumers are (Since the beginning of 2020, the president
certainly not happy about them. has dismissed two Petrobras heads after spar-
And Bolsonaro has reason to be concerned ring with them publicly over petroleum product
about their unhappiness – not just because pricing. Just last month, the company swore in
he is president, but because he is standing for its third CEO in two years.)

P4 www. NEWSBASE .com Week 19 12•May•2022