Export of Russian gas collapsed: ordinary Russians will pay

Tariffs for “blue fuel” will rise noticeably from December

The list of tariffs for utilities, which will be increased from December 1, now includes the gas tariff. It will be indexed by 8.5%, as envisaged by the government forecast of socio-economic development for the next three years. Moreover, the measure will affect both industry and the population.

However, the question arises: against the backdrop of a collapse in export deliveries of “blue fuel” to Europe and the emergence of an excess of raw materials in the domestic market, it would not be worth the state not to rush to increase gas prices, thus providing at least ordinary people with the opportunity to save money.

The last time tariffs for housing and communal services were raised on July 1, 2022. Then, according to Rosstat, prices for sanitation in the whole country increased by 5.2%, for gas – by 4.8%, for electricity supply services – by 4.6%, for hot water supply and heating – by 4, 1%, for cold water supply – by 4%. The next time the state planned to increase them on July 1, 2023, however, at the end of September, the Ministry of Economic Development announced that the measure was postponed to an earlier date (December 1 of the current year), and that in general tariffs would increase by no more than 9%. That is, the average monthly payment for a family of three will increase by a maximum of 324 rubles.

As for gas specifically, the payment for it for all categories of consumers will increase by 8.5% from December 1, 2022 and by 7% from July 1, 2024. This, in particular, was recalled by the Federal Antimonopoly Service, which in its comment noted that tariffs for the population will change below inflation (at the end of 2022, expected at the level of 12-12.4%).

Representatives of the Ministry of Energy, justifying the indexation of wholesale prices for industrial consumers, referred to the need to “gradually bring regulated gas prices to an economically justified level.” According to them, “against the background of a rise in the price of raw materials and materials”, this will allow uninterrupted production and transportation of gas to buyers, as well as create additional sources of financing for capital investments. The Ministry of Economic Development did not remain aloof from the discussion either. Maxim Reshetnikov’s office recalled that “the growth of regulated gas tariffs was held back for a long time – the government of the Russian Federation in the last 3 years raised them to two times lower than inflation.” Well, the current indexation is necessary to upgrade the infrastructure and continue the gasification program.

Meanwhile, there is another reality: today Russia has obvious problems with the sale of natural gas, despite the decline in production. For the period from January to September, production decreased by 12.1% to 428 billion cubic meters. In turn, exports to non-CIS countries over the course of 10 months fell by 42.6%, to 91.2 billion cubic meters, even despite stable supplies to China via the Power of Siberia pipeline, Artem Deev, head of the analytical department at AMarkets, notes. In turn, as a result of the stagnation of the economy, the demand for “blue fuel” in the domestic market from January to September fell by 5.6%.

“This failure must be somehow compensated, and urgently,” explains Deev. – Therefore, it was decided to increase tariffs by 8.5% for all categories of consumers already in 2022, and not in July 2023. The measure will bring billions of rubles to the budget and increase the profitability of Gazprom’s business in the face of sanctions and reduced exports. As for the surplus of natural gas from the producer, it is technically impossible to accumulate it – the excess raw material is simply burned. Therefore, in the future, production will be reduced, revenue and profit will fall, although due to indexation and to a lesser extent.”

Excess gas production capacity due to the fall in exports to Europe does not mean that hydrocarbon production is becoming cheaper for the monopoly. On the contrary, with a decrease in sales volumes, the cost per cubic meter, on average, rises in addition to the current increase in costs due to general inflation, argues Mark Goykhman, chief analyst at TeleTrade. According to him, there are practically no surpluses: gas is produced in volumes, based on sales opportunities and with costs at actual cost.

“Therefore, the supplier can sell raw materials within the country only if the growing costs are compensated,” says Goykhman. – It is achievable either at the expense of its own funds, or by indexing tariffs for consumers, or, finally, at the expense of the budget in the form of benefits and subsidies to the supplier. Probably a combination of these three options is used. Refusal of indexation (which, admittedly, is lower than inflation) will lead to an increase in the financial burden on Gazprom itself and the state. However, this burden will be fully felt by consumers.”