“We'll have to choose between two evils”
Against the backdrop of an unbridled rise in market prices for motor fuel, the government is considering two options for measures to curb them. Firstly, it is proposed to introduce a protective duty on the export of petroleum products in the amount of $250 per ton. Secondly, introduce a complete ban on exports “for a certain period to saturate the market.” Both options look very tough, while independent experts doubt their effectiveness.
Those companies that fulfill the quota for the supply of petroleum products to the domestic market and the stock exchange will receive a refund of the duty in the form of a reverse excise tax on oil, the authors of the stabilization measures promise. In addition, according to their plan, such a duty should prevent “gray” exports. Manufacturers are protesting, predicting an inevitable price surge on the wholesale market. In addition, oil workers say, it is not clear how to distinguish “gray” exports from “white” ones, as well as how to return funds through a reverse excise tax. The discussion unfolded at a recent meeting with the participation of Deputy Prime Minister Alexander Novak, representatives of the Ministry of Finance, the Ministry of Energy, the Federal Antimonopoly Service, as well as a number of raw materials companies.
Meanwhile, the price of AI-95 gasoline at auction on Friday, September 15, rose to 76,403 rubles per ton and approached record values. Against this background, reports continue to be received from the regions (in particular, from the Samara, Ryazan and Novosibirsk regions, as well as Crimea and the Krasnodar Territory) about a shortage of fuel at gas stations. At the same time, exports of Russian petroleum products are growing, primarily to Turkey and Brazil. The point is clear: trading gasoline abroad is much more profitable than selling it domestically.
—we asked Nikita Maslennikov, a leading expert at the Center for Political Technologies.
“The reaction of the authorities is understandable. Exchange prices are breaking records; last week they rose by 4% for both gasoline and diesel. In addition, due to a shortage of fuel and fuels and lubricants in a number of regions, field work – the harvesting campaign and winter sowing – is under threat. The Ministry of Energy endlessly holds meetings with oil workers, they vow to supply fuel to farmers, but in reality little changes. To date, harvest volumes lag behind last year's figure by 13.2%. These circumstances are largely due to confusion with government decisions. How many were there in the third quarter alone? Either we determine the composition of special exporters, then we reduce the damper from September 1, or we change the minimum standards by which companies must sell gasoline and diesel fuel on the stock exchange. Naturally, business reacts to all this chaos according to the market classics – raising prices and fighting off potential losses.
– Both are not so hot, you have to choose between two evils. Let's say, if you introduce an export ban, even temporary, how are you going to return to the world market? There are no slow runners or slow thinkers there. You will simply set up your own exporters. Of course, we won’t be completely kicked out of the market, but the Saudis, Iranians, Indians—whoever—will not fail to take advantage of the situation. As a result, export volumes will decrease, and this is a direct deduction from oil and gas revenues. The solution may be beautiful in terms of populist effect, but it is frankly counterproductive. As for the prohibitive duty of $250 per ton, this idea causes no less violent protest among businesses. It is not clear to him how, when and how the reverse excise tax will operate. Irritation is largely growing in connection with the government's decision on the fuel damper, which should not have been cut so radically – by half. It is clear that now it is impossible to return the previous parameters.
– Well, such inarticulateness in their actions is repeated from year to year. The summer of 2023 marked the peak of repair work at the refinery, which should be completed by the end of September. Usually, these works are distributed more or less evenly over the months, but now they have been shifted to the second half of the year. Why? As a result, we got a skew of demand over supply and fuel prices went up. When this factor goes away, prices tend to stabilize. But for some reason, a fuss began with prohibitive measures. It is also unclear how the state is going to deal with “gray” exports. The official register of raw materials companies that are allowed to trade with foreign countries includes, among other things, some incomprehensible “kerosene stoves.” These are not manufacturers, not refineries. How so? In general, any not fully worked out, unfounded, unclear intention drives up prices. This is a market pattern: business wins back losses in advance, naturally reacting to this very uncertainty. As a result, some regions received fuel, while others did not. In some places the harvesting campaign is in order, but in others it is not. By the way, the cunning people from the Ministry of Energy could present the option with a temporary ban on exports as some kind of horror story for businessmen. Like, if you don’t start moving, we’ll agree to it.