How can gas prices in Russia change in the summer

    How will gasoline prices in Russia change in summer

    RIA News © Kirill Kallinikov

    In the spring, fuel prices in Russia fell slightly. Experts attribute this to a drop in demand for fuel due to the introduction of a self-isolation regime and a reduction in transportation. In the summer, amid lifting quarantine restrictions and the beginning of the car season, analysts predict a slight increase in the price of gasoline and diesel. At the same time, the government’s stabilizing measures will help curb rising fuel prices, analysts are sure.

    In the spring, the cost of fuel in Russia showed a slight decrease. According to the Federal State Statistics Service, in early March, the average price level for AI-92 and AI-95 gasoline was 42.51 and 45.92 rubles per liter, respectively, and as of June 1, the indicators reached 42.42 and 45.86 rubles.

    Cheaper fuel prices occurred in most Russian regions. Most notably, the average price level decreased in the South and North Caucasus Federal Districts – by 23 and 28 kopecks, to 46.17 and 45.57 rubles per liter. The exception was the Central and Far Eastern Federal Districts, where over the past three months, gasoline on average has risen in price by four and five kopecks – up to 45.05 and 46.88 rubles per liter.

    At the same time, the cost of diesel fuel decreased throughout the country and on average fell by 43 kopecks – to 47.71 rubles per liter.

    “After the introduction of the self-isolation regime, Russians became much less likely to drive private cars. At the same time, the volume of freight transport was reduced. These factors have led to a temporary decrease in demand and fuel prices. However, as quarantine restrictions are removed in the summer, fuel prices may increase slightly, ”said Mark Goikhman, TeleTrade’s chief analyst.

    Meanwhile, a possible increase in gas and diesel prices in the coming months will be restrained by a special compensating mechanism – a damper. This was told to RT by the economist of BCS Premier Anton Pokatovich.

    Recall that after a sharp rise in fuel prices in 2018, the government agreed with oil companies to freeze wholesale prices. At the same time, it was unprofitable for oil companies to supply fuel to the Russian market at a fixed cost. Export prices significantly exceeded domestic prices, so it was more profitable for business to sell oil products only abroad. As a result, from January 1, 2019, the state began to compensate companies with lost revenues from fuel supplies to the domestic market.

    “If domestic fuel prices are higher than export prices, then oil companies pay part of the profit to the budget. At lower domestic prices, companies, on the contrary, receive compensation from the treasury. Today, the state reimburses oil producers 68% of lost revenue from the sale of gasoline and 60% from diesel fuel. This allows us to keep the increase in retail gas prices in Russia within inflation, ”Pokatovich explained.

    In June, Russian oil companies should redirect a significant amount of raw materials to the domestic market for the production of more than 3.1 million tons of gasoline. As a result, domestic fuel supply will exceed demand, which will help stabilize fuel prices. This is stated in the message of the Ministry of Energy of Russia.

    “There is no risk of rising retail prices at rates in excess of inflation,” the ministry said.

    Weak addiction

    It is noteworthy that in spring Russian prices for gasoline and diesel fuel reacted weakly to the massive collapse of oil quotes. As explained by RT expert at the Academy of Finance and Investment Management Gennady Nikolaev, the final cost of fuel in Russia is more dependent not on oil prices, but on the level of the tax burden on the business and the additional costs of producers.

    “The share of raw materials in the structure of the cost of fuel in Russia is less than 10%, and the largest weight, about 70%, have state excise taxes, VAT and mineral extraction tax. The rest is occupied by the costs of logistics, processing and storage of the product. That is why, when oil fell to its lowest level over the past 30 years, consumers did not notice any changes at gas stations, which already keep prices at the minimum acceptable values ​​to attract new customers, ”said Nikolaev.

    According to analysts, in the summer a temporary ban on the import of fuel from abroad will play in favor of gasoline price stability. The corresponding restriction entered into force on June 2 and is valid until October 1, 2020. Thus, the country’s leadership is trying to protect the financial situation of Russian manufacturers.

    “Foreign companies are temporarily ready to supply cheaper fuel to Russia, since they themselves purchase raw materials at fairly low prices and are not bound by serious tax payments to the budget. If they were allowed to supply the Russian market, the gas stations would buy mostly imported fuel, which would result in huge losses for our companies. After a rebound in world oil prices, foreign suppliers would again raise prices, and Russian companies could no longer compete with them because of financial problems, ”explains Mark Goichman.

    According to Anton Pokatovich, with the start of the car season and the restoration of demand for fuel, the cost of a liter of gasoline in Russia can grow by 2-3%. According to Gennady Nikolaev, by the beginning of autumn, the average price of AI-92 gasoline will reach 42.45 rubles, and AI-95 – 46.25 rubles per liter.

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    source: rambler

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