Valery Bessel: "Gasoline prices will only increase"
Increase in gasoline prices was caused speculations in the market and there are no objective reasons for it, Russia's Federal Antimonopoly Service (FAS) informed. It sees no preconditions for growth of retail and wholesale gasoline prices. The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, discussed this topic in an interview with Vestnik Kavkaza.
- Can current high prices be explained only by speculators' activity?
- Of course not. I spoke about this many times. In order to develop the industry, oil companies require investments. However, right now all oil companies are paying off their debt burden using operational profit. There's not enough financing, since the entire oil industry is under sanctions, so we continue to invest in the development of oil industry. In this situation, we have two strategic options. To ruin oil industry, just like ho we ruined everything else in the 1990s, or find out who will pay for it. Population has to pay, which is quite natural. Those people who don't have cars don't really care about how much drivers pay for gasoline. Transport tax is much bigger than property tax. And it's justified. It's like a tax on wealth, which we can't introduce for some reason. We don't introduce progressive tax. It's understandable, because if we had it, people would stop paying taxes, just like in the 1990s. Therefore, everyone has to pay 13%. That's why gasoline prices will once increase. This is an objective reality. Oil industry doesn't have any other source of money.
- Because of tax burden?
- We have competitors - Western companies, Chinese oil corporations. But our oil industry suffers from the highest tax burden. Half of the budget is formed based on taxes paid by oil companies. When it comes to our oil reserves, we are only in the sixth place in the world. 15 billion tons will last 28 years when production is more than 500 million tons per year. And that's it.
- Can Russia contain the growth of prices for this key commodity?
- We can be market economy, or return to planned economy. And we won't return to planned economy, because we're no longer the Soviet Union. And only one thing can contain the prices in market economy. You throw more gasoline to the market, and it seems like it's getting cheaper, but this process is regulated by the FAS. We consume about 143-148 million petroleum products per year. Those who drive, transport companies and the army are the main consumers. Any ban won't fit into the market economy.
- Should we expect that gasoline will get cheaper?
- Right now we're developing such regions as Eastern Siberia and the Far East more and more. But there's no infrastructure - no roads, no railways, no settlements, no facilities. If we want to increase production there, to about 530-540 million tons per year, for example, we need to invest more money in the development of infrastructure. Who can invest in this infrastructure? It can be government, but it doesn't have money in the budget, because social payments take too much, or oil companies that have to somehow earn money. Oil companies sell only petroleum products. Therefore, most likely, gasoline prices will return to the times when dollar was worth 30 rubles, and gasoline costed 30 rubles. We simply paid, since we realized that it's a normal price. And it was one of the lowest prices in the world, almost like in the US. Prices are much higher in Europe. Gasoline is becoming too expensive for oil companies. So in order to compensate for all the costs, to pay off all the costs of creating a new infrastructure, we will have to pay.