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Why after February 5 a collapse of gasoline in Russia may begin

  • January 30, 2023
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The refusal of the European Union to consume Russian diesel fuel is fraught with serious problems that are unexpected for an ordinary Russian motorist. The AvtoVzglyad portal reveals

The refusal of the European Union to consume Russian diesel fuel is fraught with serious problems that are unexpected for an ordinary Russian motorist. The AvtoVzglyad portal reveals what market experts are silent about.

Very soon, on February 5 of this year, Europe’s decision to refuse the supply of Russian diesel fuel will come into effect. For decades, local residents poured Russian diesel into the tanks of millions of their cars and knew no grief. Until recently, Russian oil refineries sent up to 50% of all diesel fuel produced in the country to the West: up to 1.8 million barrels of diesel fuel (about 250,000-270,000 tons) were shipped to Europe from Russian refineries.

Now this flow is slowly slowing down, which is reflected in the Russian exchange rates for this oil product. At the end of November 2022, the cost of a ton of diesel fuel was about 65,000 rubles, now it has dropped to about 45,000 rubles. And it continues to fall.

On the one hand, it’s cool. There is a threat of an oversupply of heavy fuel on the domestic market and retail prices for it should fall. Maybe. But there is a small catch. At whatever price (or even for free) you refuel the car, the engine will continue to consume the same amounts of fuel. So surpluses will still appear on the fuel market and they can only be tied to storage facilities. Which are also not made of rubber. The exit called “stop doing it” is not good.

If only because diesel is extracted from oil at the same time as petrol and kerosene. After all, when oil is refined, at least 30 liters of diesel are formed for every 100 liters of gasoline. And more often than not. And you can’t avoid it. Over time, when there are no free storage facilities for pumping diesel fuel, refiners will basically be forced to reduce the volume of oil refining: do not let the unnecessary product run into the ground! This will lead to a decrease in the production of all types of motor fuels in general. This is a direct path to a shortage of gasoline! Well, where there is a shortage, prices at gas stations rise.

Of course, we hope that the excess diesel fuel is partially burned in the furnaces of boiler houses and power plants. But a fair share of them will still go to the retail market and bypass gas stations. Even now, with average prices in Moscow for diesel fuel at the level of 58 rubles per liter, any car owner can fill his personal car with 45-47 rubles per liter.

This company is run by “micro wholesalers” who buy at least 5,000 fuel at a time from the refinery (at 35-37 rubles per liter of diesel) and then sell it to private traders. Very open and legal. And if an abundance of heavy fuel appears in Russia, then in small wholesalers it can drop in price to 25 rubles per liter. And even less. Even if official gas stations try to maintain current prices…

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Very soon, on February 5 of this year, Europe’s decision to refuse the supply of Russian diesel fuel will come into effect. For decades, local residents poured Russian diesel into the tanks of millions of their cars and knew no grief. Until recently, Russian oil refineries sent up to 50% of all diesel fuel produced in the country to the West: up to 1.8 million barrels of diesel fuel (about 250,000-270,000 tons) were shipped to Europe from Russian refineries.

Now this flow is slowly slowing down, which is reflected in the Russian exchange rates for this oil product. At the end of November 2022, the cost of a ton of diesel fuel was about 65,000 rubles, now it has dropped to about 45,000 rubles. And it continues to fall.

On the one hand, it’s cool. There is a threat of an oversupply of heavy fuel on the domestic market and retail prices for it should fall. Maybe. But there is a small catch. At whatever price (or even for free) you refuel the car, the engine will continue to consume the same amounts of fuel. So surpluses will still appear in the fuel market and they can only be tied to storage facilities. Which are also not made of rubber. The exit called “stop doing it” is not good.

If only because diesel is extracted from oil at the same time as petrol and kerosene. After all, when oil is refined, at least 30 liters of diesel are formed for every 100 liters of gasoline. And more often than not. And you can’t avoid it. Over time, when there are no free storage facilities for pumping diesel fuel, refiners will basically be forced to reduce the volume of oil refining: do not let the unnecessary product run into the ground! This will lead to a decrease in the production of all types of motor fuels in general. This is a direct path to a shortage of gasoline! Well, where there is a shortage, prices at gas stations rise.

Of course, we hope that the excess diesel fuel is partially burned in the furnaces of boiler houses and power plants. But a fair share of them will still go to the retail market and bypass gas stations. Even now, with average prices in Moscow for diesel fuel at the level of 58 rubles per liter, any car owner can fill his personal car with 45-47 rubles per liter.

This company is run by “micro wholesalers” who buy at least 5,000 fuel at a time from the refinery (at 35-37 rubles per liter of diesel) and then sell it to private traders. Very open and legal. And when an abundance of heavy fuel appears in Russia, it can drop in price to 25 rubles per liter at small wholesalers. And even less. Even if official gas stations try to maintain current prices…

Source: Avto Vzglyad

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