It smelled of another rise in the price of gasoline: the Ministry of Finance spurred prices

The cost of fuel went up after Siluanov’s statement

Gasoline is clearly experiencing a spring aggravation: exchange prices for AI-95 have risen above the mark of 60 thousand rubles per ton. It is highly likely that automobile fuel will rise in price at gas stations, albeit with some time lag. How much, it’s hard to say. According to experts, the situation is connected both with seasonal factors and with the intention of the Ministry of Finance to reduce subsidies to oil companies for the damper.

Gasoline in the wholesale segment has been continuously rising in price since February, and a couple of weeks ago, growth accelerated sharply. At the end of April, the head of the Ministry of Finance, Anton Siluanov, made a statement that clearly did not arouse enthusiasm among market players. He said that from July the authorities plan to halve the damper subsidies that oil companies receive from the budget for fuel supplies to the domestic market. The corresponding bill has not yet been submitted to the State Duma, but this will not be the case. The plans of the financial department are due to the intention to reduce the treasury deficit, which amounted to 3.4 trillion rubles in four months (against 2.9 trillion planned for the whole year).

Recall that the damper mechanism, introduced in 2019, is designed to keep retail prices for automotive fuel within Russia within the limits of inflation with an increase in world prices for raw materials. But due to its cumbersome nature, it does not respond quite flexibly to short-term changes in the markets. Small independent gas stations have the hardest time in these conditions: since wholesale prices are constantly ahead of retail, the owners of such gas stations incur losses, not wanting to get involved in a cost race and revise their pricing policy so as not to lose customers. On average, losing about 1.5-2 rubles per liter of gasoline sold, they balance on the verge of profitability and are forced to take unpopular steps sooner or later. Only VICs (vertically integrated companies – giants of the oil sector) can smooth out these fluctuations due to an impressive margin of safety.

“Today, the damper does not fully justify itself, and the cuts in subsidies announced by the Ministry of Finance create additional nervousness in the market,” argues leading expert of the Center for Political Technologies, economist Nikita Maslennikov. – Even now, oilmen are trying to “win back” future losses. Plus, a powerful seasonal factor in the rise in gasoline prices is scheduled repairs at a number of refineries with an increase in demand for fuel in May. Exchange quotes are not immediately broadcast to retail, since there is a significant time lag between the growth of the large wholesale price, the small wholesale price and being taken for sale by the retailer.”

What is happening now is typical for May-June: usually in the second half of the year the situation levels off. In any case, prices will gradually rise, but they will not go beyond the limits of annual inflation (although what this annual inflation will end up with is still not entirely clear). Maslennikov refers to the global oil situation as one of the risk factors: it is not clear what will happen to a barrel of Brent, the cost of oil products and demand for them. In any case, the US Department of Energy has lowered its average annual forecast for Brent by almost 8% – from $85 per barrel to $78.65. As for the story of independent Russian filling stations, it has been repeated year after year, for decades now. However, the owners of small gas stations still manage to somehow get out, despite the low margin. In particular, some are subsidized by regional authorities, while others manage to make reserves by renting certain refinery capacities. That allows you not to raise prices and keep customers.

“In the medium term, we will see a rise in price by 3-5 rubles per liter,” says Artem Deev, head of the analytical department at AMarkets. – A couple of days ago, the Ministry of Energy of the Russian Federation expressed the opinion that prices will not go beyond inflation, since gas stations that buy gasoline at exchange prices manage to stay in the black. And now AI-95 costs 60.6 thousand rubles per ton. The damper, of course, smoothed the situation. But, according to some information, the margin of gas stations for AI-95 is now 0.8 rubles per liter, and for AI-92 – 0.4 rubles per liter. And this is already on the verge of profitability. Accordingly, in order to compensate for the budget deficit, the Ministry of Finance intends to lower the damper threshold.” That is why, Deev believes, we will see a gradual increase in the cost of fuel at gas stations in the coming months. The expert does not judge the long-term consequences of such a policy of the financial department for retail gasoline prices.