The rise in diesel fuel (DT) prices at gas stations this year (2.4%) is currently more than twice lower than the average inflation rate (4.91%). Meanwhile, all gasoline grades have already come close to matching the inflation rate. However, gasoline traditionally rises in price from late spring to summer, as happened this year, while diesel prices typically rise quickly at the end of summer and in autumn, and this year will likely follow the same pattern.

In retail, the price increase for different fuel grades is limited by inflation, and no company would want to attract the attention of the Federal Antimonopoly Service (FAS).

However, in wholesale, there is a chance that the seasonal rise in diesel prices will follow the "gasoline" scenario, where the main price increase affected the AI-95 grade of gasoline. The same could happen with winter diesel fuel. Nevertheless, the government has tools to control price hikes.

The increase in gasoline prices has already led to the resumption of the ban on its export starting August 1. According to Deputy Prime Minister Alexander Novak, such a measure is not being considered for diesel fuel at this time.

A diesel export ban would be a last resort, as Russia produces twice as much diesel as it consumes domestically, with half going for export. In comparison, nearly 90% of the gasoline produced in the country is sold domestically, with only about 10% exported. Diesel is the main export product among petroleum products. Therefore, a diesel export ban is only possible in an emergency and for a short period. Otherwise, the market will become oversupplied, leading to a decline in oil refining volumes. It is no coincidence that last autumn, the full ban on diesel exports lasted only two weeks.

In an interview with "RG," Yuri Stankevich, Deputy Chairman of the State Duma's Energy Committee, stated that there are currently no objective economic reasons for a rise in wholesale diesel prices due to the start of the active agricultural season. Firstly, world oil prices have decreased by more than 5% over the last month, with no signs of reversing this trend. Secondly, the main parameters for taxation of oil refining and oil product supply remain unchanged.

However, wholesale diesel demand typically begins to rise in the second half of August, eventually translating into retail prices. According to Rosstat, last year by July 31, diesel fuel at gas stations had risen by 0.6% since the start of the year, lagging behind gasoline by a factor of eight. By October 2, diesel prices had surpassed gasoline, rising by 11.1%.

As noted by Dmitry Gusev, Deputy Chairman of the "Reliable Partner" association, diesel prices grow quickly in the late summer to early autumn period. Then, in October, winter diesel replaces summer diesel, which is inherently more expensive. However, this process varies significantly by region. Winter diesel is used less in the south and more in the north. The price difference between winter and summer diesel at gas stations is usually two to three rubles per liter, though this can depend on various factors, such as the price of kerosene, which is often used in the production of diesel that doesn't freeze in low temperatures.

Sergey Tereshkin, CEO of the OPEN OIL MARKET fuel marketplace, said that the end of August and September is traditionally a period of rising diesel prices, and this year will be no exception. The main price increases will occur not at the exchange, but in the small wholesale segment, where prices during last year's harvest season reached up to 100,000 rubles per ton. At the exchange, prices briefly exceeded 75,000 rubles per ton, according to the expert.

The difference between winter and summer diesel at gas stations is typically two to three rubles per liter.

Winter diesel has another similarity to AI-95 gasoline. The exchange price for winter diesel is not included in the conditions for subsidy payments. These payments compensate part of the difference between the indicative price set by the government and the export price of fuel. The subsidy is paid to oil companies for wholesale fuel deliveries to the domestic market, with a deviation from the indicative price of no more than 10% for gasoline and no more than 20% for diesel. For gasoline, only the AI-92 price is considered, and for diesel, the summer grade.

Energy expert Kirill Rodionov noted that oil companies are looking for loopholes to increase their production and sales margins without the risk of losing subsidies or facing export bans. These loopholes exist in the retail fuel market and in the exchange prices for AI-95 gasoline and winter diesel fuel. These segments will continue to pose risks for fuel price hikes.

According to Tereshkin, seasonal price increases for diesel could still occur even if winter diesel were included in the subsidy parameters. The subsidy only takes into account exchange trading, where only 16% of the diesel produced is sold; the remaining 84% is sold in small wholesale, where oil companies can raise prices without fearing the loss of subsidies.

However, Gusev believes that the subsidy is doing its job of stabilizing the overall fuel market situation. Some subsidy parameters and fuel market rules may need to be adjusted in response to changing market conditions. It might make sense to separate subsidy payments for different gasoline grades and diesel types, as well as to differentiate diesel sales regulations based on grade and season. We know which grades experience increased demand and when, he explained.

Additionally, attention should be paid to the cost of jet fuel, solvents, and additives used to produce winter diesel. Gusev suggests possibly stimulating higher production of these components during the winter diesel season.

Rodionov points out that due to low competition, oil companies have little incentive to lower prices. The only things that act as a restraint are the regulator's "scolding" (in the form of export bans) and the fear of losing subsidies. This issue could be addressed by increasing the exchange sale quotas — from the current 15% for gasoline and 16% for diesel to 33%.

However, one might argue that the refining and retail margins are sometimes zero or even negative. This is due to both the rising global oil and oil product prices and the high tax burden on the oil industry. With zero or negative margins, no amount of competition will lead to price reductions.

Stankevich believes that the government, in cooperation with key oil industry companies, must ensure the smooth operation of fuel supply chains within the country. First and foremost, this applies to rail transport, to prevent local shortages in the regions.

"For these purposes, an operational headquarters has already been created under the leadership of Alexander Novak. In addition to other officials, representatives from the Ministry of Agriculture and regional authorities are involved. Their task is to signal the situation in a timely manner during the harvest season. I hope the mistakes of last year will be taken into account," emphasized Stankevich.


Translated using ChatGPT

Sourse: https://rg.ru/2024/07/26/rost-cen-na-dizel-mozhet-uskoritsia-k-koncu-leta-no-ne-prevysit-infliacii.h.