Retail gasoline prices have been outpacing inflation significantly for the second consecutive year by early autumn. According to Rosstat, inflation as of September 2 was 5.17%, while gasoline prices at filling stations rose an average of 6.7% since the start of the year. Moreover, premium gasoline grades like AI-98 and above saw a price increase of 10.7%, more than double the inflation rate.

Experts believe that by the end of the year, the rise in fuel prices at gas stations will align with inflation or stay close to it, as happened in 2023. Notably, while there was talk of a fuel crisis last autumn, the current situation is not being characterized as such. Furthermore, diesel prices, critical for farmers during the harvest season, have seen a modest rise of 3.2% since the beginning of the year, well below inflation.

However, gasoline prices continue to climb. The export ban, reinstated on August 1 and extended until the end of the year, has failed to halt this trend. According to the Moscow Fuel Association (MTA), in the week of September 2-8 alone, gasoline prices in Moscow rose by 24 kopecks for AI-92, 33 kopecks for AI-95, and 1.34 rubles for AI-100.

While gasoline prices on the exchange began to decrease in September, they had approached their 2023 highs in the last week of August.

Falling crude oil prices, which dropped from over $80 to $71 per barrel, are now driving exchange rates downward. Although oil prices have a delayed impact on domestic fuel costs, they may exert some pressure unless oil rebounds quickly.

Another factor is the unusually warm September, which extended the summer travel season, increasing demand for gasoline. Rain and cooler weather are expected to temper this demand.

Currently, independent gas stations, rather than those owned by major oil companies, are driving most of the price increases. This was also the case last year. Smaller stations lack the financial buffer to maintain low prices, and their cautious pricing affects overall statistics.

Several additional factors are fueling the rise in fuel prices. Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" association and a member of the expert council for the "Russian Gas Stations" competition, points to the rise in Russia's key interest rate, which has made borrowing significantly more expensive—three to four times the inflation rate. This has increased the costs of production and distribution due to higher wages, equipment expenses, and other factors. Moreover, the weakening ruble has driven up equipment import costs.

Scheduled maintenance at Russian refineries (refineries) in September is expected to reduce fuel production. Analyst Vladimir Chernov of Freedom Finance Global notes that to counteract potential shortages, refineries increased average daily processing by 20% in August compared to July. Nonetheless, the anticipation of reduced production is already pushing up wholesale prices on the exchange.

Gusev argues it is too early to conclude that the export ban has failed. The ban is a long-term measure. Refinery maintenance and unmet summer demand are maintaining stable exchange purchases. Additionally, logistical issues such as delays in railway deliveries increase costs, contributing to higher prices. Uncertainty about delivery timelines further drives bulk buying, exacerbating the situation.

A critical question remains: why are premium gasoline prices rising the most? Chernov attributes this to higher production costs associated with using combustion catalysts and additives, whose prices have increased due to a shortage of foreign equipment.

Over half of the gasoline sold at gas stations is AI-95, though it accounts for only about 40% of exchange sales. Gusev highlights the need to separate AI-92 and AI-95 in regulatory mandates, as current rules combine all grades, leading to disparities.

According to Sergey Tereshkin, CEO of the Open Oil Market platform, the faster price growth for AI-98 and above is tied to infrastructure damage at refineries, specifically to high-octane fuel production facilities. Sanctions on equipment imports mean it will take a long time to address this issue. As a result, annual price growth for gasoline in 2024 is expected to exceed inflation rates, even with seasonal adjustments.

Gusev disagrees, asserting that retail gasoline prices will not exceed inflation by year-end. Wholesale prices, however, are not tied to inflation, so there is no cause for concern. For premium grades like AI-98, he suggests moving their entire production to exchange markets, as these fuels are not intended for lower-income groups.

Chernov also predicts that domestic retail gasoline prices will not surpass average annual inflation in 2024, partly due to regulatory intervention by the Federal Antimonopoly Service (FAS), which may act sooner than year-end to curb price growth.

Tereshkin notes an unusual trend this year: due to faster price increases for AI-98, oil companies may hold back diesel price hikes, which traditionally occur in autumn, to maintain their reputation with regulators. This tacit agreement to keep fuel price increases within inflation limits is likely to be upheld for diesel but breached for gasoline. As a result, the export ban on gasoline could extend into early 2025.

Gusev believes it may be time to revisit state price regulation. The wholesale market creates more problems than it solves in ensuring fair prices. In the current socio-economic conditions, state regulation appears to be the optimal solution.

However, this raises the question of how independent gas stations, which make up over half of all stations in Russia, will operate under price controls. They will still need to pay competitive wages, maintain equipment, and grow their businesses. Relying entirely on sales of ancillary goods is not feasible everywhere, and government subsidies for gas stations are unlikely under current conditions.




Translated using ChatGPT

Sourse: https://rg.ru/2024/09/10/s-litrom-razberutsia.html