The cost of gas continues to rise in the U.S., with cost per gallon in northern California about $4.69. It’s outlandish, and expensive for people, esp. in the West, who have to drive long distances for work and study, but it’s not as bad as the price for gasoline throughout Europe, and many other places in the world.Here in Brazil, where the national oil company, Petrobras, is growing and thriving, gas is R$2.79/liter, or $10.54/gal. (Compared to Venezuela, where the price is $0.12/gallon.)
According to Bloomberg.com, in August 2012, the price of gas in Norway was $10.12, the highest in Europe. That’s because instead of subsidizing fuel at the pump, the country uses its oil profits for services such as free college education and savings for infrastructure improvements. Resource-rich Norwegians absorb the high prices with relative ease. The average daily income is $272. The share of a day’s wages needed to buy a gallon of gas is 3.7 percent.
Here in Brazil, since April 2012, we’ve never seen the price of gas at less than R$2.70/liter. Brazil is one of the earth’s natural resource superpowers. Oil is no exception to the country’s riches, with more than 2.3 million barrels pumped there every day. Brazil is also a world leader in biofuels, boasting the highest rates of ethanol use. Still, a gallon of gas in Brazil now costs more than the global average, and a modest average income means the price weighs heavily on Brazilians. The average daily income is $34. The share of a day’s wages needed to buy a gallon of gas is more than 30 percent.
Considering that Brazil is self-sufficient in oil production, why is the cost so high?
One quick answer is: because Petrobras is a state-owned company and the government uses it as a “cash cow” to pay for its own large expenditures. In the U.S., taxes, levies, and charges on gas represent 13% of the cost. Here in Brazil, they represent 55% of the fuel price. (from http://brazilianbubble.com/why-gas-prices-in-brazil-are-80-more-expensive-than-the-us/)
But what does all this mean?
It means that when there is a price appreciation of oil around the world, as it has been the case for the last year, the disposable income of Brazilian families are doubly penalized, as they are compressed not only by the actual increase of oil price, but also by the significant increase of taxes in absolute terms.
Brazil is thriving economically in some spheres, but the people are paying the taxes, which are supposed to fund education and social infrastructure. So far, according to the “men and women in the streets” whom we’ve come to know, they bear the brunt but have yet to see or reap the rewards. “Order and Progress” it says on the flag. One can dream.