Fuel prices are the next iteration of Bolsonaro’s war on governors

“Everything’s expensive: gasoline, diesel, kitchen gas. What does Petrobras have to do with that? [Tuesday] at 9 am the floor will question how the company’s prices weigh on us all,” tweeted House Speaker Arthur Lira on Monday, announcing a sitting to grill Petrobras CEO Joaquim Silva e Luna on exactly why gasoline and diesel have gotten so expensive in Brazil.

“Petrobras must be reminded that Brazilians are its shareholders,” said Mr. Lira.

As we explained in today’s issue of the Brazil Daily newsletter, markets were rattled by threats of interference in Petrobras’s pricing policy — which since 2016 is pegged to international oil prices and is heavily affected by currency issues. In New York, the company’s American depositary receipt (ADR) dipped 2 percent on Monday’s aftermarket. 

Stocks closed Tuesday’s session 1.33 percent in the red, with investors fearing the government could interfere in fuel prices to tame inflation.

And there is plenty of reason to be concerned. In April 2019, President Jair Bolsonaro intervened to prevent Petrobras from raising diesel prices by 5.7 percent — which led stocks to plummet and the company to lose BRL 32 billion in market value in a single day. Then, earlier this...