Analyst Yushkov doubted the ability to contain fuel prices: “Big changes”

If the situation on the Russian fuel market does not change, the state will introduce “the most stringent measures” to change the situation. Deputy Prime Minister Alexander Novak warned about this at his last meeting with the owners of large commodity corporations. The tough tone of the Deputy Prime Minister is obviously due to the fact that the previously introduced requirements, primarily the ban on the export of gasoline and diesel, which were aimed at stabilizing the cost of fuel on the domestic market, had a rather sluggish effect on fuel prices. Why didn’t previous government decisions work, what other measures are in the authorities’ arsenal, and what will happen next with fuel prices? “MK” sought the answer to these questions from the leading analyst of the National Energy Security Fund, an expert at the Financial University under the Government of the Russian Federation, Igor Yushkov.

The restriction on the export of gasoline and diesel fuel from Russia was introduced on September 21. The government decision should not be considered a “draconian” method – over the summer alone, the cost of the most popular types of fuel on the stock exchange almost doubled. Since the beginning of summer, exchange quotes for AI-92 have risen in price from 55 thousand to 70 thousand rubles per ton. The moratorium on exports worked: the price of gasoline immediately fell by 22-24%. True, tightening control over the sales of motor fuel has not stopped domestic suppliers from filling their pockets by selling fuel abroad and indirectly stimulating increased prices at Russian gas stations. Every day, domestic market quotes for fuel gain back an average of 1%. At this rate, in two or three weeks they will again reach record levels, and then all orders of officials will have to be revised again.

– After the radical measures introduced by the state regarding fuel producers, should we count on a speedy transition of the domestic market to low prices for motor fuel?

– Is not a fact. Oil companies and other suppliers are unlikely to quickly begin to fill the market with sufficient volumes of fuel. Bargaining continues between the government and large commodity companies. This is confirmed by the recent meeting of Deputy Prime Minister Alexander Novak with the leadership of industry holdings. As far as I understand, the parties agree on the following relationship scheme. If a manufacturer has sold certain volumes of petroleum products on the domestic market, agreed with regulatory agencies, the doors of his enterprises open, that is, there is an opportunity to earn money by selling raw materials to foreign clients. Vladimir Putin has repeatedly demanded that manufacturers first fill the domestic market with energy resources, and only in accordance with the surplus – volumes of fuel that are not so critical for replenishing reserves and fulfilling national economic tasks – to enter into various long-term contracts on foreign trading platforms.

– And why is such a scheme bad for our market?

– In fact, the implementation of this idea has been progressing for several decades. There are suspicions that transactions (on the resale of raw materials purchased on the exchange to third companies – “MK”) will soon be banned on the domestic market as well. A number of traders who supply, purchase and transport fuel to local consumers risk simply being left without work – without a license to carry out their activities, many firms and their employees will be left penniless.

– Should such a compulsory instrument be considered fair – after all, many sales companies a priori leave the game?

– But these companies do not always buy fuel on the stock exchange in order to sell the purchased volumes to domestic customers. It is quite difficult to find out to what extent they are guided by the interests of national legislative policy in the field of fuel trade, and to what extent they manage to increase their own earnings, taking advantage of gaps in constantly updated industry documents. Most likely, the government is trying to get rid of such players, so the domestic sales market for gasoline and fuel oil is in for serious changes: only those companies that have reported to the government on selling similar volumes to domestic customers will be able to sell petroleum products abroad at better prices.

– Only prices on the domestic market began to rise again – does that mean the effect has not yet been achieved?

– The free market was created so that sellers and buyers could agree on quotes that suit everyone. Panic on trading floors is often caused not by the actions of direct counterparties, but by the speculative reaction of traders, for whom the main goal is to increase profits, but they are in no way interested in strengthening a stable position in the national market.

The government, of course, will try to regulate the rate of increase in gasoline prices at the inflation rate. But it’s unlikely to work. By the end of December, inflation is projected to be around 7-8%, and the retail cost of, for example, diesel fuel has already become 10% higher since January. Other types of motor fuel have risen in price to a lesser extent, so officials may be able to maintain tariffs for AI-92 and AI-95 through modified tax measures. For ordinary consumers – you and me – it is now much more important not to find the culprit for the rise in gasoline prices, and not to allow new price hikes at commodity exchanges or gas stations.

– Officials from authorized departments are trying to blame the price confusion in the fuel market on the so-called “gray” export of gasoline. They say that it is precisely those “several million tons” per year, sent abroad by not entirely clean businessmen, that become the reason for the news about shortages and sharp rises in prices in regional markets. Is this really true?

Current government measures are aimed at eradicating this layer of “gray” exporters. Traders who buy gasoline on domestic exchanges and then resell it to foreign buyers should not be called unscrupulous. Bought low and sold high: this is the essence of a free economic market. Theoretically, they will now be deprived of this method of increasing income. True, time will tell how much such a government ban will work in practice. Many regulatory instruments introduced by the state seem attractive at first, but their implementation after a few months is disappointing and only causes irritation among ordinary motorists.

– What might be the disappointment in this case?

– It is necessary to understand that more than half of the retail fuel market in Russia is controlled not by large businesses, to which the state is making new fiscal claims, but by independent firms – they may have up to several dozen gas stations at their disposal in many regions of the country. A number of production and transport associations have historically supplied raw materials to business facilities – a similar supply chain has existed almost since the time of the planned economy of the USSR. For their own survival, such companies, apparently, have to participate in “gray” exports in one way or another. As a result of the measures introduced by the state, large holdings that conduct dialogue directly with high-ranking government officials will, of course, lose part of their revenue, but on the whole they will survive this situation. But the life of small firms, “sharpened” since Soviet times on supplying fuel to certain, local enterprises, will be in the balance: they themselves may leave the market forever and deprive their stable customers of fuel.