Import parity makes headlines whenever fuel prices rise — or when someone promises they could fall more. The term sounds technical, but the idea is simple: compare how much it costs to produce domestically with how much it would cost to bring it from abroad.
In the day-to-day of the sector, parity is neither a dogma nor an automatic villain. It is a reference. It works well in some scenarios, fails in others, and on its own cannot handle the complexity of the Brazilian market.
What import parity is, without the jargon
Import parity is a hypothetical calculation: if Brazil needed to import gasoline, diesel, or LPG today, how much would it cost to arrive here? The calculation includes the international price of the product, the dollar exchange rate, maritime freight, insurance, and the costs to internalize the product.
This calculation becomes a ruler. If the domestic price stays well below it for a long time, importing stops making sense. If it stays well above it, room opens up for external competition.
What this ruler is really for
In practice, parity helps answer three very objective questions:
- Is it worth importing fuel right now? - Is the domestic price competitive relative to the international market? - Is there a risk of shortages if no one wants to bring product from abroad?
For those who operate refineries, terminals, or trading desks, this is basic. For consumers, parity does not set the pump price, but it helps explain why there is a ceiling — and sometimes a floor.
Advantages when the market works
Under normal conditions, parity brings some positive effects:
- It provides predictability for importers and distributors. - It prevents the domestic market from isolating itself from what is happening abroad. - It reduces the risk of fuel shortages during periods of high demand.
In a continental country like Brazil, which still imports part of its diesel and LPG, this reference helps keep the flow running.
Where parity shows its limits
The parity calculation does not see everything. It does not consider, for example:
- Regional differences in internal logistics. - Idle capacity or bottlenecks in refining. - Stock policies and companies’ commercial strategies.
In addition, international prices fluctuate quickly. Replicating every variation in the domestic market can create noise, especially for those who depend on fuel every day to work.
When it makes sense to follow parity more closely
There are moments when parity becomes almost an anchor:
- Periods of strong dependence on imports. - International crises that affect global supply. - Seasonal peaks in consumption, such as the agricultural harvest or harsher winters.
In these situations, completely ignoring the reference usually comes at a cost later, whether through product shortages or abrupt adjustments.
When it doesn’t solve things on its own
Parity does not replace refining policy, inventory management, or investments in infrastructure. Nor does it answer questions such as:
- Why do two neighboring states have such different prices? - Why does diesel weigh more heavily on freight than gasoline does on urban consumers’ budgets?
These answers are more closely related to taxes, logistics, and local competition than to parity itself.
A practical way to look at the topic
In everyday life, parity works better as a thermometer than as a prescription. It indicates the market’s temperature, but it does not say which medicine to take.
When the debate moves away from all-or-nothing — "it must be followed" versus "it must be abandoned" — it becomes easier to understand what is really at stake: ensuring supply, reducing shocks, and dealing with a country that produces a lot of oil but still depends on well-aligned decisions to turn that into affordable fuel.
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