Sergey Tereshkin: Adjusting the damper may lead to an increase in exchange fuel prices.

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Sergey Tereshkin: Damper Correction Could Lead to Rising Fuel Prices
19.07.2024
18
According to him, the division of the damping mechanism in practice will stimulate the growth of exchange prices: oil companies will be able to increase their margin by inflating the exchange prices for one type of fuel while receiving subsidies for another.

It was previously reported that the government plans to change this rule by splitting the damping payments by fuel type—gasoline and diesel fuel (DF). Exceeding the maximum established price for one type of fuel will not affect payments for the other type.

The damping mechanism compensates part of the difference between the indicative fuel price set by the government and its export price. It is paid from the budget to oil companies for wholesale fuel supplies to the domestic market with a deviation from the indicative price (on average for the month) of no more than 10% for gasoline and no more than 20% for DF.

Currently, if either of these values is exceeded, the damping is nullified. The mechanism can also work in reverse if export prices are lower than domestic prices. However, this has only happened once in the history of the damping mechanism (since 2019), in 2020, when oil prices collapsed.

As for extending the application of the investment surcharge on reverse excise duty for oil until January 1, 2033, Tereshkin believes that this measure will support the industry. The investment surcharge is intended for oil refineries (ORFs) whose production of petroleum products accounts for less than 75% of the volume of primary oil processing but who invest in modernizing the refineries.

In the first half of 2024, the investment surcharge accounted for 6% of subsidies to refineries, including the damping and reverse excise (105.8 billion rubles out of 1899 billion rubles). The problem is that sanctions on equipment supplies for ORFs have significantly complicated the modernization of Russian oil refining. Therefore, extending the investment surcharge means prolonging subsidies.

At the same time, according to the expert, the measures mentioned are still under discussion and may be revised multiple times, including due to the significant federal budget deficit, which is affected by subsidies to oil companies.


Translated using ChatGPT

Sourse: https://rg.ru/2024/07/19/ekspert-korrektirovka-dempfera-mozhet-vyzvat-rost-birzhevyh-cen-na-toplivo.
#Fuel Prices #Oil Market #Sergey Tereshkin #Damper Adjustment #Fuel Industry #Energy Economics #Fuel Price Growth #Oil Trading
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