Gasoline caught in a price tornado
There are problems again with gasoline, especially high-octane grade AI-95. The growth rate of wholesale prices this summer exceeded last year's figures. Meanwhile, then the situation seemed simply catastrophic.
Thus, on July 23, prices for AI-95 during trading on the St. Petersburg International Mercantile Exchange (SPIMEX) almost reached 75 thousand rubles per ton. This is plus 6% over the past week, plus 38% since June 1, and, finally, growth of 73% since the beginning of January this year. For comparison: exactly one year ago, AI-95 cost 69,925 rubles per ton — more than five thousand rubles less. This brand reached its price peak on September 7, 2023 — 76,876 rubles per ton. That is, several exchange sessions remain until last year's record.
True, the situation with AI-92 is somewhat calmer. On July 23, the exchange indicator rose to 56,925 rubles per ton. Plus 20% compared to June 1, 40% compared to the beginning of January this year. The figures are also impressive, as in the case of AI-95. But a year ago it was 64,879 rubles per ton. And the peak on September 18 showed 70,508 rubles per ton. So for now, the growth rate of the wholesale price is lower than last year.
The same with summer diesel. On September 19, at the SPIMEX auctions, diesel reached 75,036 thousand rubles. Now, on July 23, it is still slightly higher than 61 thousand rubles per ton. This is slightly less than at the previous auctions. But still, since the beginning of the year, summer diesel fuel has risen in price by almost 20%.
However, the price tornado has mainly hit wholesale sales. The government has managed to contain retail prices at gas stations thanks to manual control. According to Rosstat, from the end of December 2023 to mid-July of this year, retail prices for gasoline of both brands increased by an average of 4.15%, summer diesel — by 2.07%. Which, nevertheless, is approaching the rate of general inflation — 4.79%. At the same time, Deputy Prime Minister Alexander Novak always firmly promises that prices at gas stations will not exceed the general inflation rates.
By the way, last year by mid-September, retail prices for gasoline increased by 9.86%, and diesel — by 11.26%. While the accumulated inflation by that time had reached only 4.32%.
The fuel story turns out to be unhealthy. Last year they seemed to have managed prices, significantly reducing them in October-December, but this summer everything returned to normal. The situation developed as per the catchphrases of Viktor Chernomyrdin, which amazed citizens when he was chairman of the government.
On August 6, 1993, at a press conference dedicated to the unexpected abolition of the Soviet rubles, he justified himself: «We wanted the best, but it turned out as always!» Later, the former prime minister expressed himself even more aphoristically. True, in the memory of contemporaries, there are different interpretations of the exact verdict on the effectiveness of state regulation. For example, «this has never happened before, and here it is again.» Or a little closer to folklore: «this has never happened before, and here it is again!».
Chernomyrdin's quotes have to be recalled because the unprecedented growth of domestic prices for petroleum products last year was largely provoked by ill-considered steps by the government. Of course, the fall of the ruble and the increase in world prices for oil and petroleum products, as well as traditional summer repairs at oil refineries, played their negative roles. And unlike AI-92 and diesel, high-octane gasoline is not produced in our country, as many experts believe, in sufficient quantities to contain unexpected price peaks. The average annual surplus of AI-95 does not exceed 10-15%. This is not enough during summer repairs. In addition, part of the gasoline in demand on world markets is resold at a margin by fuel companies that do not produce crude oil.
But last year, the knockout blow that led to a temporary but significant deficit was dealt by Finance Minister Anton Siluanov.
On April 28, 2023, he announced plans to reduce budget compensation to oil companies for holding down domestic prices (fuel damper) by 30 billion rubles per month. The minister explained this decision as follows: “We compensated the difference from the budget when prices were high in the West, and when prices were low, oil companies paid extra to the budget. There are no Western markets now. Therefore, at present, the damper essentially goes to the margin of oil refiners.”
The relevant amendments to the Tax Code were signed by President Vladimir Putin only on July 31, and they came into effect on September 1. But they were cancelled on October 6, and the damping coefficient was returned from 0.5 to 1. But the export of petroleum products increased significantly last summer, and oil producers received 1.138 trillion rubles in compensation payments from the budget from January to October, which is 38% less than for the same period last year.
It was necessary not only to return the previous damping coefficient, but also to increase the mandatory sales of petroleum products on the exchange. Up to 9.5% of diesel (this year it is already 16%) and up to 13% of gasoline (it was 12%).
But the main thing is that on September 21, 2023, an indefinite ban on the export of petroleum products was introduced. This step turned out to be the most effective. Prices immediately began to fall. On January 8 of this year, they fell by more than 43% for AI-95, to RUB 43,421 per ton. Therefore, the ban was gradually relaxed. In October, partial resumption of diesel exports was allowed. On November 17, everything else followed.
It is no coincidence that this year the government decided to repeat the successful experience. On February 21, Alexander Novak proposed banning the export of gasoline from March 1 to August 31 in order to reduce the rush demand on the domestic market during spring field work, summer vacations, and repairs at some refineries. Which was done.
As if they had seen the light of day. In March, Ukrainian drones damaged a number of key refineries. The Nizhny Novgorod refinery suffered especially. There, the unit that produces 11% of all domestic AI-95 was put out of order for several months.
But by the end of May, the situation, especially with AI-92, began to improve. And at the end of June, the Nizhny Novgorod Oil Refinery began to operate at full capacity. Therefore, on May 20, a decision was made to resume gasoline exports, first in June, and then in July.
However, it soon became clear that world gasoline prices exceeded domestic Russian prices by at least two times. Prices soared, despite Novak's assurances of sufficient gasoline reserves.
Moreover, Alexander Novak notes that, in general, the situation on the Russian fuel market is now stable, with the exception of AI-95 gasoline, but the issue is being resolved, «nothing terrible is happening.»
But although there is no fear, they had to return to a tried and tested method. On July 23, the Deputy Prime Minister said: «As of August 1, the automatic ban on the export of petroleum products (this only applies to gasoline) will be reinstated.»
But that's not all. Alexander Novak admitted that an extension of the ban to September-October is being considered: «If we really see that the ban on gasoline exports will need to be extended in September-October, then this decision will be made.»
So the story with oil product prices has come full circle — right according to the theory of cyclical development of history. The government is again trying to hold down prices by banning exports. However, only for gasoline. Meanwhile, market analysts suggest increasing supply on the domestic market, primarily AI-95, which has already displaced AI-92 (more than 50% of sales on the exchange and at gas stations) from the pedestal of the «people's» gasoline. To do this, it is necessary to separate the mandatory trading of AI-92 and AI-95 on the exchange, since now the increase in gasoline sales is mainly due to AI-92. And most importantly, to increase the production of AI-95.
In fairness, it should be noted that Novak ordered the preparation of amendments to the Tax Code, which will separate the reset of the damper in the event of a drop in external prices for individual items for gasoline and diesel. Currently, compensation payments for both oil products are reset to zero simultaneously.
Predicting the situation is not so easy. But we can hope that wholesale prices will stabilize now, and in the fall, as last year, they will decrease. And retail prices will definitely not go beyond the inflation rate. Only this year inflation may become double-digit.