Expert Yushkov assessed the ban on gasoline exports: “There is nothing special to please motorists”

The task is to prevent fuel shortages on the domestic market

On the first day of spring, a ban on gasoline exports came into force for a period of six months. We are talking about a “preventive measure” that the government can cancel at any time, noted Deputy Prime Minister Alexander Novak. Analysts urge not to confuse it with the ban on the export of petroleum products introduced in September 2023: then there was an acute shortage of diesel fuel (not gasoline) in the domestic market, and the authorities had to act like crazy. Act after the fact, and not proactively, as now.

According to Novak, today there are no shortages in the fuel market. However, “in conditions where one of the refineries is shut down for emergency repairs,” the measure will help offset the expected increase in demand for fuel in the spring and summer, as well as during scheduled repairs of oil refineries. The restriction will not affect the already agreed volumes of supplies to the countries of the Eurasian Economic Union, South Ossetia, Abkhazia, Mongolia and Uzbekistan. In addition, the government plans to increase the standard for diesel fuel sales on the stock exchange to 16% to compensate for the increase in demand for gasoline.

Earlier, Alexander Novak, the author of the initiative (in a letter addressed to Prime Minister Mishustin dated February 21) justified it with data from monitoring exchange prices. Since the beginning of 2024, the cost of AI-92 and AI-95 gasoline, as well as summer diesel fuel, has increased by 8–23%. At the same time, at gas stations the price of AI-92 and AI-95 decreased by 2 and 1 kopeck per liter, respectively, summer diesel fell in price by 7 kopecks, and the price of winter diesel remained at the same level. Of course, the situation is not comparable to what happened last year: today we are talking only about alarm bells and the authorities’ desire to prevent a crisis. And in the summer of 2023, there was a full-scale fuel crisis: in a number of regions, gas stations were closed due to losses, wholesale prices for diesel showed explosive, uncontrollable growth, agricultural harvesting equipment stood idle because there was nothing to refuel it with.

– To avoid such a scenario, the government today took a preventive measure – that’s the key word! – says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. – In September last year, the government banned the export of petroleum products, which primarily concerned diesel fuel (along with gasoline). Then it was urgently necessary to put out the fire in the domestic market, but now there is no fire, they just want to prevent such excesses. The current restriction applies exclusively to gasoline, which Russia consumes slightly less (90%) than it produces. That is, only 10% is exported. The main problem was created by an accident at the Nizhny Novgorod refinery, which is the country’s largest gasoline producer: about 10% of total production. The plant is not operating at full capacity because some of the equipment is out of order. Accordingly, due to refinery downtime, we either face a physical shortage of fuel, or we stop exporting.

– An accident is an abnormal factor. But there are still seasonal circumstances ahead, such as high demand for gasoline in the spring-summer period and planned (repeated annually) repair work at refineries. It turns out that they are superimposed on a force majeure event. What risks does this create?

– The risks are clear. The driving season starts at the end of April and beginning of May; people will travel to the sea by car, since some airports in southern Russia are closed. Under these conditions, any batch of gasoline sent for export would provoke a shortage in the domestic market. By introducing a ban in advance, the government seeks to conserve the small surplus of gasoline that is currently in fuel depots. To be able to meet growing demand not only from current production at the refinery, but also from reserves. In addition, the electoral cycle also affects the situation. Nobody wants a price jump to happen on the eve of an election or shortly after it. This will increase social discontent: people here are sensitive to rising fuel prices.

– Can the authorities lift the ban earlier, without waiting for the end of the six-month period?

– The owners of the Nizhny Novgorod Refinery promised to launch it in April, so that the plant would operate at full capacity in May. If this happens, if Ukraine does not launch new attacks on Russian oil refining infrastructure and fuel storage facilities, and if demand does not grow as much as feared, the ban could well be lifted sooner. But again, Russia exports little gasoline as such. Unlike fuel oil, diesel fuel, for which there are special pipelines to deliver raw materials to Novorossiysk, to ports in the Leningrad region. Accordingly, the problem with gasoline today is not nearly as acute as it was with diesel last year. The government intends to monitor the market situation and monitor consumption dynamics. Consistently growing, by the way, from year to year. So there’s not much to please motorists with.

– What will happen to prices at gas stations?

– The measure to ban exports will not affect them. It is designed to prevent possible price jumps on the stock exchange, and only then at gas stations, to keep prices below the inflation rate. The downside of the ban is that manufacturing companies will receive less revenue. Even if in small volumes, they export gasoline, making money on it and paying income tax to the state. Accordingly, there will be losses for the federal budget. However, for the authorities, a positive social effect is much more important than some lost profit.