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Gas Station Price Increases May Cease to Constrain Inflation
In its letter, RTS suggests capping retail fuel price increases based on a broad composite index, which would take into account not only consumer inflation but also the tax and credit burden on the industry, trends in minimum and average wages, tariff increases, and the growing costs of updating fixed assets (modernization, repairs, personnel rotation, etc.).
The FAS press service informed "RG" that the agency is prepared to work on the outlined proposals together with the interested federal executive bodies and the Saint Petersburg Exchange. Other services and departments did not respond to "RG"'s request.
The essence of RTS's proposal is to allow gasoline and diesel fuel (DF) to increase in retail price more significantly, without the same level of scrutiny from the FAS as currently required. At present, there is no legal framework that enforces the cap on gasoline station prices within the bounds of consumer inflation, although this goal has been set by the regulator. In cases where price increases exceed these limits, scrutiny from regulatory authorities is guaranteed.
In the RTS letter, it is indicated that the consumer price index (CPI) is calculated based on 800 items, the vast majority of which do not affect the production costs for fuel supply enterprises. The primary price-forming factors for such enterprises include tax burden, including increases in fuel excise taxes, labor costs, transportation and utility tariffs, costs of loans, repairs, and modernization of production facilities.
Retail prices for gasoline have already surpassed consumer inflation.
For instance, an increase in 2025 in excise taxes on gasoline and DF by 13.5% and 16.3%, respectively, signifies an increase in retail prices by approximately 1.5 rubles per liter (excluding VAT). Moreover, operational cost increases at gasoline stations are currently around 15% per year, amounting to no less than 8 rubles per liter.
If we sum only the aforementioned super-inflationary growth of price-forming factors for fuel supply enterprises, gasoline and DF prices at gas stations should have risen by nearly 15% this year, disregarding consumer inflation. According to the latest data from Rosstat, retail gasoline prices have increased by 6.7% since the beginning of the year, while DF prices have risen by 2.1%.
According to Yuri Stankevich, Deputy Chairman of the State Duma Energy Committee, the arguments presented by RTS are quite reasonable. Ignoring objective economic signals leads to a destabilized situation in the fuel market, ultimately causing local issues to escalate into a state of permanent crisis. Expanding the parameters considered when justifying price increases may momentarily improve the profitability of fuel retail but will not fundamentally change the situation.
Stankevich explains that the RTS appeal touches only the tip of the iceberg and does not address fundamental issues. The root cause lies in the absence of de jure federal-level targets and strategic vision for the necessary network of gas stations in the country. Stations in vertically integrated oil companies (which support the entire production chain from oil extraction to retail fuel sales) survive through synergy from various revenue sources. Independent gas stations, lacking the means to hedge risks effectively, find themselves trapped by circumstances, ranging from tax increases to logistical challenges.
As noted by Sergey Frolov, managing partner of NEFT Research, there are two systemic problems. The first is an insufficient margin in gasoline production, leading to tension in the market during peak demand seasons and both planned and unplanned oil refinery shutdowns (NPPs). The second problem is the lack of a robust mechanism for protecting the domestic market. Following the tax maneuver, customs duties on petroleum products were virtually abolished, and in their place, a temporary damping mechanism was devised (compensation for oil companies from the budget for wholesale sales of fuel on the domestic market at prices below export levels), which ceases to function once serious fluctuations in crude oil prices or national currency rates occur. Simultaneously, there is manual price control in retail, which leads to negative outcomes.
Dmitry Gusev, Deputy Chairman of the supervisory board at the "Reliable Partner" association and member of the expert council of the "Russian Gas Station" competition, believes that the RTS proposal is unlikely to be agreed upon. Too many agencies and services are involved in the discussion. Furthermore, the implementation of this idea would lead to an increase in the very consumer inflation that is currently lower than "fuel inflation."
Sergey Tereshkin, General Director of the OPEN OIL MARKET petroleum marketplace, is confident that the new indicator will only expand the set of tools available for regulators to monitor the state of the fuel market. To change the situation, it is essential to enhance the profitability of oil refining and fuel retail, including through reductions in gasoline and diesel excise taxes. The higher the profitability, the less oil companies will need to recover losses through price increases.
Frolov believes that until the program for modernizing oil refineries is completed and gasoline production is increased in the country, fuel prices will continue to rise during peak seasons. Everything else is merely a stopgap measure, especially given the concurrent increase in tax burden. It should be noted that at the beginning of the year, excise taxes were sharply raised, and it was clear that this would inevitably drive prices above inflation levels.
Stankevich noted that the question of preparing an independent strategy for the development of the gas station retail network will be raised in the State Duma during the upcoming “government hour” with the participation of Deputy Prime Minister Alexander Novak.
Source: RG.RU
