US rules: why gasoline prices will continue to rise
- September 7, 2023
- 0
Let everything go as it is, we cannot and do not want to do anything substantial about it: for ordinary citizens, this is what the attitude of the
Let everything go as it is, we cannot and do not want to do anything substantial about it: for ordinary citizens, this is what the attitude of the Russian authorities to what is happening now in the Russian motor fuel market looks like. What is the reason for such striking behavior of officials?
There was a sudden panic in the statements of some top Russian officials about the prices of motor fuel and the situation in this market in general. For example, in the rhetoric of Minister of Agriculture Dmitry Patrushev.
– A week ago we talked about the need for fuel and lubricants at a lower price, because their costs have increased enormously. Now we are talking about something completely different. Because we have a fuel availability problem! Now we will stop harvesting and we will not be exterminated for winter crops. It will be a disaster,” he told the State Duma.
And on the stock market, wholesale prices are beating absolute records day after day. AI-95 reached the level of 76,500 rubles per ton, AI-92 – up to 65,500, and diesel fuel up to 68,500. Until recently, the authorities were somehow not really concerned about this. It was only at the beginning of September that there was talk of the government restricting free access to the export of petrol and diesel and cutting off intermediary companies.
Such a measure is supposed to reduce the demand for oil products and halt the rise in prices. Industry experts question the effectiveness of this move. Because the volume of “gray” exports from Russia to world markets is relatively small.
– The reason for what is happening in the Russian fuel market does not lie with gray exporters, not with refineries under repair, and not with logistical problems that cause fuel shortages for farmers. The root of evil lies in the system we have. The Russian fuel market is more than liberal. No one is forbidding an oil company to determine the price of gasoline as it sees fit. And traditionally they are tied to the international market. All markings and citations are (for some time now) in godless dollars. Their prices are rising – ours immediately follows them, – explains Vyacheslav Mishchenko, an expert on the fuel market, – In order not to complain about situations such as those we are currently experiencing, it is necessary (much sooner!) to “loosen up” domestic Russian prices from international, he thinks.
Note that the currently observed feverish rise in fuel prices in Russia was partly the result of sanctions pressure organized by the West. The Russian financial system proved ready for something similar. Since 2014 she has adjusted accordingly and now she feels great.
And no one thought of reforming the fuel industry in the same way. Although no: some obscure official somewhere in the bowels of the Russian government may have something to say about this subject and have been brainstorming about it. But this thought process did not result in practical actions. Apparently they relied too much on the “fuel damper” mechanism. But as the events of 2023 showed, it turned out to be just a formalization of previous behind-the-scenes agreements between the government and the oil industry: We compensate you for rising prices in foreign markets, and you don’t overclock Russian prices for gasoline and diesel fuel.
What have we seen this year? “Damper” money was not enough, and market participants began to systematically increase their earnings. They increased the export of petroleum products abroad, which led to an increase in prices in the domestic market – by 75% since the beginning of 2023. Why is it common in Russia for us to shout about “tightening the screws”? About overregulation of the economy and other nonsense?
What the hell are “nuts”? Yes, we have the most liberal economy in the world: manufacturers set fuel prices on an export alternative (under sanctions, hold on!) and no one dares interfere. Regulators limit themselves to expressing their concerns publicly, nothing more. Almost ideal conditions for doing business!
− We change the rules of the game on the world stage, we change the map of the world in our national interest, but at the same time we remain dependent on the economies of unfriendly countries! Maybe it’s time to change something else? We are being removed from the dollar economic system. Okay, but then why do we keep holding on to it? It is necessary to create our own price system, separate from the dollar, in the domestic market for oil and petroleum products. And gradually connect neighboring and friendly countries with it. Only by creating your own market with your own rules can you protect yourself from spikes in it caused by external factors, Mr. Mishchenko is sure.
This is of course beautiful. Everyone who follows knows what and how to do, so that car owners do not regularly resent the inexplicable price increases at gas stations, and farmers do not cry every spring and autumn because of a shortage of fuel. And yet the situation has not changed for decades. Even in the critical conditions for the country’s economy, sanctions and SVO!
Only one conclusion can be drawn from this: political will is needed to reform the fuel industry in the way the new circumstances require. Because the “players” lack the courage and desire to risk the assets, the dollars and euros accumulated in their accounts. They are quite content with the usual market paradigm that developed in the late 1990s. Therefore, until those who have to make decisions stop waiting for life to return to the state “before SVO”, unfortunately, we will continue to observe regular price fluctuations in the domestic Russian market.
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There was a sudden panic in the statements of some top Russian officials about the prices of motor fuel and the situation in this market in general. For example, in the rhetoric of Minister of Agriculture Dmitry Patrushev.
– A week ago we talked about the need for fuel and lubricants at a lower price, because their costs have increased enormously. Now we are talking about something completely different. Because we have a fuel availability problem! Now we will stop harvesting and we will not be exterminated for winter crops. It will be a disaster,” he told the State Duma.
And on the stock market, wholesale prices are beating absolute records day after day. AI-95 reached the level of 76,500 rubles per ton, AI-92 – up to 65,500, and diesel fuel up to 68,500. Until recently, the authorities were somehow not really concerned about this. It was only at the beginning of September that there was talk of the government restricting free access to the export of petrol and diesel and cutting off intermediary companies.
Such a measure is supposed to reduce the demand for oil products and halt the rise in prices. Industry experts question the effectiveness of this move. Because the volume of “gray” exports from Russia to world markets is relatively small.
– The reason for what is happening in the Russian fuel market does not lie with gray exporters, not with refineries under repair, and not with logistical problems that cause fuel shortages for farmers. The root of evil lies in the system we have. The Russian fuel market is more than liberal. No one is forbidding an oil company to determine the price of gasoline as it sees fit. And traditionally they are tied to the international market. All markings and citations are (for some time now) in godless dollars. Their prices are rising – ours immediately follows them, – explains Vyacheslav Mishchenko, an expert on the fuel market, – In order not to complain about situations such as those we are currently experiencing, it is necessary (much sooner!) to “loosen up” domestic Russian prices from international, he thinks.
Note that the currently observed feverish rise in fuel prices in Russia was partly the result of sanctions pressure organized by the West. The Russian financial system proved ready for something similar. Since 2014 she has adjusted accordingly and now she feels great.
And no one thought of reforming the fuel industry in the same way. Although no: some obscure official somewhere in the bowels of the Russian government may have something to say about this subject and have been brainstorming about it. But this thought process did not result in practical actions. Apparently they relied too much on the “fuel damper” mechanism. But as the events of 2023 showed, it turned out to be just a formalization of previous behind-the-scenes agreements between the government and the oil industry: We compensate you for rising prices in foreign markets, and you don’t overclock Russian prices for gasoline and diesel fuel.
What have we seen this year? “Damper” money was not enough, and market participants began to systematically increase their earnings. They increased the export of petroleum products abroad, which led to an increase in prices in the domestic market – by 75% since the beginning of 2023. Why is it common in Russia for us to shout about “tightening the screws”? About overregulation of the economy and other nonsense?
What the hell are “nuts”? Yes, we have the most liberal economy in the world: manufacturers set fuel prices on an export alternative (under sanctions, hold on!) and no one dares interfere. Regulators limit themselves to expressing their concerns publicly, nothing more. Almost ideal conditions for doing business!
− We change the rules of the game on the world stage, we change the map of the world in our national interest, but at the same time we remain dependent on the economies of unfriendly countries! Maybe it’s time to change something else? We are being removed from the dollar economic system. Okay, but then why do we keep holding on to it? It is necessary to create our own price system, separate from the dollar, in the domestic market for oil and petroleum products. And gradually connect neighboring and friendly countries with it. Only by creating your own market with your own rules can you protect yourself from spikes in it caused by external factors, Mr. Mishchenko is sure.
This is of course beautiful. Everyone who follows knows what and how to do, so that car owners do not regularly resent the inexplicable price increases at gas stations, and farmers do not cry every spring and autumn because of a shortage of fuel. And yet the situation has not changed for decades. Even in the critical conditions for the country’s economy, sanctions and SVO!
Only one conclusion can be drawn from this: political will is needed to reform the fuel industry in the way the new circumstances require. Because the “players” lack the courage and desire to risk the assets, the dollars and euros accumulated in their accounts. They are quite content with the usual market paradigm that developed in the late 1990s. Therefore, until those who have to make decisions stop waiting for life to return to the state “before SVO”, unfortunately, we will continue to observe regular price fluctuations in the domestic Russian market.
Source: Avto Vzglyad
Donald Salinas is an experienced automobile journalist and writer for Div Bracket. He brings his readers the latest news and developments from the world of automobiles, offering a unique and knowledgeable perspective on the latest trends and innovations in the automotive industry.
