In Russia, a noticeable increase in fuel prices is expected

The owners of gas stations warned the government about a possible sharp increase in fuel prices.
23.08.2018
Vedomosti
Origin source
The Russian Fuel Union (RTS) appealed to Deputy Prime Minister Dmitry Kozak with a request to take measures to prevent another increase in fuel prices, the RTS letter of August 23 said. Vedomosti got acquainted with the copy of the document, RTS President Evgeny Arkusha confirmed the letter. The vice-premier has not received him yet, said the representative of Kozak.

Why will fuel rise in price

Now the market has real prerequisites for a sharp increase in wholesale prices for fuel, according to a letter from Arkush. In particular, due to a substantial excess of domestic fuel prices by export parity, the beginning of autumn repairs at the refinery, the "cessation of administrative pressure on prices after the end of the election campaign," the tax increase in 2019, and the completion of tax maneuver.

In 2019, only because of the simultaneous increase in excises and VAT, the potential for growth in the wholesale price of a liter of gasoline will be about 4.4 rubles, Arkusha reports. "In conditions of deterring retail prices within the limits of inflation, one can expect a repetition of the price collapse in the retail market of motor fuels, similar to April-May 2018," Arkusha writes.

Maneuvers around gasoline

In spring, fuel at the gas station has already risen sharply. Reasons: spring repairs at the refinery, a seasonal increase in demand, an increase in excise taxes on petroleum products and the attractiveness of fuel exports due to rising global oil prices. At the end of May, Dmitry Kozak held a meeting with the largest oil companies - they agreed not to raise retail fuel prices, in turn, the government reduced excises.

The measures taken by the government at that time brought results, notes Arkusha. The situation in the market by the beginning of August, with the exception of some regions (the Far East, Kamchatka, Eastern Siberia), stabilized: the supplies to the domestic market increased, the supply and demand balance at the exchange trades basically normalized, the wholesale prices declined (except for the above-mentioned regions) to The level providing an acceptable profitability of the gas station. But the situation is unstable, he stresses. This confirms the growth for a few days in the second half of August of the stock exchange price of gasoline at 4,000 rubles. per ton. And given the increase in VAT and the completion of tax maneuver, only manual regulation may not be enough, according to the RTS.

Separate refills from extraction and processing

RTS believes that it is necessary to solve three main issues. First: to saturate the fuel market with oil products through tariff and tax measures (export duties, excises, ruble rate) and administrative regulation of production and supplies to the domestic market.

 Second: an objective stock price indicator is needed. For this, the RTS proposes to extend the joint order of the Ministry of Energy and the Federal Antimonopoly Service (sets the standards for fuel sales on the stock exchange - Vedomosti) not only to enterprises that dominate the market, but also to other producers of petroleum products. RTS agrees with the FAS proposal to increase the standards of sales on the exchange to 15% for gasoline and 7.5% for diesel fuel. The Union also proposes to introduce a number of changes to the rules of trade on the St. Petersburg Stock Exchange to increase competition, increase liquidity, ensure sales in the main trading session only to the market and exclude the possibility of price manipulation by producers and traders.

Third: RTS proposes to establish unified conditions for the economic activity of independent filling stations networks and filling station networks of vertically integrated oil companies (the ultimate goal is the extraction of profit), including in tax reporting. To do this, it is necessary to withdraw the retail network of filling stations from the consolidated group of taxpayers. "This will lead to normal market competition in the retail chain and, in case of administrative pressure on retail prices, will ensure a reduction in wholesale prices," the RTS concludes.

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