So why does the price of gasoline keep rising?

This is a question that many Brazilians have been asking. 

And although some believe this is solely due to the infamous ICMS tax, we'll give you a spoiler:

The tax doesn't have all the weight that people claim it does. 

Many Brazilians have felt the impact of the increase in gasoline, ethanol, and even diesel fuel prices.

Most people believe that high fuel prices only affect those who own cars.

However, with the increase in gasoline prices, everyone ends up feeling it in their wallet. 

Ultimately, for food to reach the markets, fuel is needed for transportation. 

And that's exactly why the high prices of gasoline and other fuels worry so many people. 

So, if you're one of those wondering, "Why does gasoline keep going up?", don't worry.

Today we're going to show you the real reasons behind this, where it's most expensive and cheapest, and give you some tips on how to get around this price surge.

Let's get up to speed on the subject?

So, off we go!

According to the ANP – National Agency of Petroleum, Natural Gas and Biofuels:

The price of a liter of regular gasoline in Brazil has been above the R$ 6 mark for six weeks. 

Thus, on average, a liter of fuel is sold at R$ 6.11 in 19 of the 27 federative units of Brazil. 

Today, the most expensive gasoline in Brazil is in Rio de Janeiro, where a liter is sold for an average price of R$6.76.

In second place is the state of Piauí, where gasoline costs an average of R$ 6.73 per liter. 

And so, to round out the podium, in third place, we have Rio Grande do Norte with gasoline costing R$ 6.67 per liter.

Okay, but what is the place with the cheapest gasoline in Brazil?

Today, Amapá is the state with the cheapest gasoline in Brazil. After all, the average price per liter of fuel there is R$ 5.35. 

In the state of Roraima, the value is R$ 5.74.

And so, rounding out the podium of states with the cheapest gasoline, we have São Paulo, where a liter costs on average R$ 5.80.

The other states where gasoline is still below R$ 6.00 are:

Generally speaking, in all regions of Brazil the price of regular gasoline exceeds the R$ 6.00 mark.

Thus, the breakdown by average price per liter of gasoline by region in Brazil is currently as follows:

But the burning question is this:

Why does the price of gasoline keep rising?

To better understand the landscape regarding gasoline price control in Brazil, our experts conducted a series of studies and spoke with economists. 

So, generally speaking, economists pointed out to our experts that the reason why gasoline is expensive here is due to three factors. 

They are:

Despite large oil production, the price of gasoline in Brazil is still tied to the dollar.

Although Brazil has the capacity to extract oil, it cannot refine it all to turn it into gasoline. 

That's why Brazil still needs to import some of the fuel sold here.

Therefore, the more the dollar rises, the higher the price of gasoline will be. 

Tough, isn't it?

Just as important as knowing why gasoline prices keep rising is understanding how fuel prices are determined. 

So, to give you the plain truth, we're going to show you what really makes up the price of gasoline. 

At the beginning of October, Petrobras raised the price of gasoline at the refinery, and it began costing R$ 2.78 per liter. 

In other words, this is the price that distributors pay for the fuel.

According to Petrobras, this value represents 33.4% of the amount the consumer pays at the pump. 

Thus, from that point on, the cost of the mandatory percentage of ethanol, which is 16.9% of the pump price, is added to the value.

The distribution costs and resale profit for the distributor and the gas station are 10.7%.

The federal taxes CIDE, PIS/PASEP and COFINS together represent 11.3%,

And finally, the state tax, the famous ICMS, which varies from state to state, represents an average of 27.7%.

So, speaking of taxes. Federal taxes are only levied on the sale of gasoline by the refinery.

However, ICMS is charged on the value of the product. 

Thus, because of this cascading effect of costs and taxes, the state tax ends up representing a larger amount in the price we pay at the pump. 

Why does the price of gasoline keep rising? If the ICMS tax were lowered, would the price of gasoline go down?

The ICMS tax has been a source of political conflict ever since gasoline prices started rising. 

It's true that taxes represent a large portion of what we pay at the pump. 

But the magic solution that politicians shout for all to hear—that simply lowering the ICMS tax will cause gasoline prices to fall—is not true. 

The ICMS tax hasn't changed in several years. In other words, its percentage in gasoline remains the same. 

But its value increases, because the overall value of the product increases. 

In fact, this is a similar relationship to the increase in vehicle property tax (IPVA) that will happen in 2022 due to the increase in values in the FIPE table. 

Lowering the ICMS (a Brazilian state tax) is not feasible, as many people suggest, because of the Fiscal Responsibility Law. 

This law was created to control public spending. 

The state needs to be sustained and pay its bills through a fiscal standpoint. Therefore, it is not possible for tax rates to decrease easily. 

A reduction in the ICMS tax would lead to a decrease in the price of gasoline, but it would create deficits that would have to be filled in another way.

In other words, we would pay more in another sector or for other products. 

Now that you know why gasoline prices keep rising, it's time to debunk another myth about high fuel prices:

The idea is that gas stations don't increase their profits when gasoline prices go up.

Many people believe that as soon as gasoline prices go up, the profit margin of gas stations also goes up.

However, this is not true. 

During that year, gas stations were forced to lower their profit margins in order to remain competitive.

In 2019, the profit margin for gas stations was 6.5%. 

Today, gas stations only retain 4% of the final amount paid by the consumer. 

In other words, for every R$ 100 of gasoline sold, only R$ 4.00 remains for the gas station to cover its expenses, pay employees, and actually make a profit. 

Gas stations always stand with consumers against price increases. 

Ultimately, higher prices decrease sales and force a reduction in profit margins. 

Now that you know why gasoline prices keep rising, you must be wondering:

But how can I get around these price increases?

So, with the aim of helping you, our experts have put together some tips to show you. 

The following tips take into account obvious factors, but ones that are outside the reality for many people. 

Ready to find out how to deal with the ever-increasing price of gasoline? 

So, let's go.

Choosing a fuel-efficient vehicle is an excellent way to save on fuel. 

Fuel-efficient vehicles have more functional engines that operate in an optimized way. 

Today, the best options for fuel-efficient vehicles are those with a 1.0-liter turbocharged three-cylinder engine. 

Driving economically is another extremely effective way to cope with the ever-increasing gasoline prices. 

Among the main actions for driving economically are:

After discovering why gasoline prices keep rising, it's time to ask yourself:

Do I really need to drive everywhere?

Using your car for everything leads to high gasoline costs, in addition to other expenses such as parking, for example.

Therefore, seeking alternative forms of transportation is a great way to save on gasoline.

Getting around by ride-hailing apps, public transport, bicycle, carpooling, or even walking, depending on the distance, are excellent ways to get around the high fuel prices. 

Now that you know why gasoline prices keep rising, we have a question for you:

Have you ever considered opting for an electric car?

Although they are more expensive to buy, the investment pays for itself over the years. 

Furthermore, there are incentives for purchasing this type of car, such as exemption from vehicle property tax (IPVA).

Therefore, for those looking to save money, opting for an electric car is a real lifesaver. 

But the good news doesn't end there.

Did you know it's possible to buy an electric car for up to half the price?

To do this, simply purchase your electric vehicle through an electric vehicle auction. 

To help you with this type of purchase, our experts have prepared special content.

Want to know how to get your electric car for half the price and save a lot of money on gas? 

Just click the button below!