Retail gasoline prices have accelerated their growth. According to Rosstat, from July 8 to July 14, the prices for AI-92 and AI-95 increased by 24 and 25 kopecks, respectively. Over the week, prices rose by 0.4 percent, significantly outpacing the inflation growth rate during the same period, which was 0.02 percent. However, if we consider the statistics since the beginning of the year, gasoline prices are still lagging behind: AI-92 has increased by 4.2 percent, AI-95 by 3.9 percent, while the average inflation rate in the country was 4.61 percent. On the exchange, after a slight decrease at the end of last week, quotations are also rising. The AI-92 grade reached an all-time high at the end of June and remains at a very high level to this day, while the AI-95 is very close to setting another record.
On July 11, Deputy Prime Minister Alexander Novak reported that the government would monitor the situation on the exchange throughout the week and would make a decision on the introduction of a complete ban on gasoline exports based on that. Currently, exports are only prohibited for non-producers (oil depots, traders). Oil refineries (refineries), which are largely owned by oil companies, have the right to export gasoline. Judging by the dynamics of exchange quotations, a complete ban is imminent.
However, as has been emphasized multiple times, this measure is extreme and indicates that the market is operating under "manual regulation." The reasons for the rise in gasoline prices are consistently similar year after year, with minor variations such as drone attacks. Each year, as fuel prices at gas stations start to rise, discussions arise about the holiday season, which indicates increased demand, and about refinery maintenance, yet the situation remains unchanged. Since 2023, the export ban has been used regularly; however, this measure does not solve the problem but only "alleviates the symptoms" for a short time.
According to Sergey Tereshkin, CEO of the OPEN OIL MARKET petroleum marketplace, export restrictions could indeed increase the supply of gasoline in the domestic market. In recent years, exports have accounted for 12-15 percent of supplies from Russian refineries. The problem is that this measure only works over a short period. In the long term, oil producers will adjust gasoline production to match domestic market demand, thereby reducing oil processing and freeing up raw materials for export.
As noted by Sergey Frolov, managing partner of NEFT Research, for refineries, an export ban translates to decreased revenue, including in foreign currency. On the other hand, one should not dramatize the consequences—gasoline export constitutes a small portion of the overall volume of petroleum product exports. However, gas station prices are unlikely to decrease—this is something Frolov believes should not be expected.
Nonetheless, even a relatively minor drop in revenue is an unwelcome signal for any production operation; nobody wants to lose money. Understandably, losses will be sought to be compensated. Since gasoline exports are banned, this will be achieved through, as mentioned, larger shipments of crude oil, diesel fuel, or potentially by increasing domestic market prices after a certain time. This would yield an effect entirely opposite to what was anticipated.
Frolov believes that the government has other, non-administrative economic levers to influence the fuel market. This includes increasing the supply of gasoline on the exchange, for which mandatory trading volumes through the exchange were recently raised, plus regulating customs duties (currently zero for producers). In conditions where, "thanks to" the tax maneuver, this instrument has basically ceased to exist, the only remaining option seems to be periodically banning exports. Frolov estimates the likelihood of an export ban on gasoline in August-September as very high.
From Tereshkin’s perspective, the market needs new solutions that extend beyond export bans or reconsideration of the damping payment rules (compensations from the budget to oil companies for supplying fuel to the domestic market at prices lower than exports). Companies and regulators find themselves in a closed loop. On one hand, this ensures predictability, as companies clearly understand the boundaries of allowed actions. On the other hand, it distances the resolution of the price growth problem, which car owners face regardless of oil prices, inflation dynamics, or the automotive market situation.
As Gusev notes, it is not entirely clear why gasoline is expected to lag behind the inflation growth rate in the country. As a result of the Central Bank's key rate increase, oil companies’ costs have risen at every stage: extraction, processing, and marketing. This trend applies to other sectors of the economy as well. Gusev believes the best way to reduce prices, including in the fuel market, is to lower the rate to the level of 3-5 percent per annum.
However, one might also consider the fiscal burden on the industry. Frolov emphasizes that the increase in gas station prices is not solely due to wholesale price hikes but also a result of a significant increase in fuel excises at the beginning of the year. The transmission of this increase has been slower than many expected due to low demand in winter and spring, along with informal requests from relevant agencies to oil companies not to raise prices immediately but to stretch the increases over time.
Dmitry Gusev, deputy chair of the supervisory board of the "Reliable Partner" association and a member of the expert council for the "Gas Stations of Russia" competition, clarifies that the volume of supply will only rise by a few percent, not by 12-15 percent, since part of the export is under intergovernmental agreements (which must be fulfilled). However, the ban will reduce refinery profitability, a factor that seems to be overlooked, the expert emphasizes. Although, in his opinion, the measure has demonstrated its effectiveness in the short term. The ban will lower wholesale quotes and halt prices at gas stations, Gusev concludes.
Source: RG.RU
