Who's to blame for record-high gasoline prices?

Who's to blame for record-high gasoline prices?

Russian Federal Antimonopoly Service commented on the increase in gasoline prices.

FAS representative Dmitry Makhonin said that the increase in gasoline prices was caused by speculative activities in the market.

He noted that speculators bought gasoline and want to make a lot more money. Makhonin stressed that the FAS sees no preconditions for the increase in retail and wholesale gasoline prices.

FAS representative added that it was also due to the repair at the Moscow refinery. He also recalled that the consumption of gasoline has declined due to the winter season.

АИ-92 подорожал на 0,46%, до 44,746 тыс рублей за тонну, АИ-95 - на 0,23%, до 46,93 тыс рублей

The wholesale price of Ai-95 gasoline increased by 0.46%, the price of Ai-92 increased by 0.23%. A ton of AI-95 up to 44,746 thousand rubles while, AI-92 to 46,93 thousand rubles.

The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, speaking to a correspondent of Vestnik Kavkaza, noted that the contribution to the increase in gasoline prices was made, among other things, by oil producers themselves. "During the period when gasoline prices were actively rising, two events have happened: the price of crude oil has significantly increased in the world market, pulling up prices for oil products, and OPEC has imposed restrictions on oil production, creating conditions for more profitable prices for the sale of gasoline abroad . As a result, oil companies have tried to equalize the margins obtained from exporting products abroad and from sales in the national market," he explained.

The government can change this situation if desired. "The government has many opportunities to regulate gasoline prices: first, the FAS has the right to set certain standards for goods and services produced by monopolists. Second, there is regulation by the Ministry of Natural Resources that can motivate companies to keep prices at an acceptable level (for example, by limiting the issuance of new quotas for the extraction of minerals.) Third, tax regulation can be changed by the state at any time," Alexander Safonov said.

A senior analyst of 'Uralsib Capital', Alexei Kokin, speaking to Vestnik Kavkaza, noted that speculators cannot cause the initial increase in prices, they just try to play to other factors. "Activities of speculators may somewhat worsen the situation in a number of cases, but the root cause, as a rule, lays elsewhere. In this case, the Moscow refinery had a temporary closure of facilities for planned repairs, which somewhat reduced the production of gasoline. If speculators knew about this in advance, they could create a stock of fuel and sell it for more money. Now the FAS expects that the supplies will soon return to the market in the same volumes, as the repair will end soon both at the Moscow Oil Refinery and at the Omsk Refinery, so the prices will decline," the expert said.

Alexei Kokin drew attention to another way of regulating the state's domestic gasoline prices. "The state can increase duties on the gasoline export , thereby reducing the cost of fuel inside the country. But the state will not use it, because it gradually reduces the role of export duties as a tool for regulating domestic prices. But we  should understand that when global oil prices increase, global gasoline prices will also increase," the senior analyst of 'Uralsib Capital' summed up.


Vestnik Kavkaza

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