Gasoline has risen in price by 16.5%: will the export ban help stop the price increase

Georgy Panaiotov commented to Forbes about the possible impact on the domestic market of the gasoline exports ban return.

Georgy Panaiotov recalls that the ban on gasoline exports, which was in effect from March 1 to May 20, caused a decrease in its cost. However, after the authorities temporarily restored the possibility of exports, prices began to rise rapidly. This, according to the expert, was due to the beginning of the summer period, when the demand for gasoline is growing, as well as the increased attacks by Ukrainian drones on Russian refineries and oil depots.

An additional factor leading to higher prices is Western sanctions, which cause oil companies to experience difficulties with the repair and restoration of refineries built using European and American technological solutions. Replacing equipment with Chinese products is not always possible and often means expensive changes in technological chains instead of standard regular repairs, the expert is sure.

In addition, he adds, producers are currently creating gasoline stocks in preparation for the autumn period of large-scale refinery repairs, and they do not have enough free fuel volumes to offer them to the market and bring down prices. Thus, the expert says, in July the domestic fuel market faced a chronic shortage of gasoline, especially Ai-95.

"Statements by government officials about the absence of a shortage are one of the classic ways to reduce the expectations of market participants for price increases,— Panaiotov notes. — Stockbrokers, on the contrary, talk about a significant deficit."

Why do different grades of gasoline become more expensive in different ways? The sharp rise in prices for Ai-95 gasoline may be explained by the impossibility of free pricing for Ai-92 gasoline due to the so-called damping mechanism, according to which the state compensates companies for losses if gasoline is sold domestically cheaper than when sold for export, Panaiotov says. The average monthly export price of gasoline is compared with the conditional wholesale price of the domestic market established in the tax code. But such a conditional price is set only for Ai-92, and for Ai-95 it does not exist, which allows refiners to further increase the price of this grade of gasoline, the expert notes.

"But the current government measures will only smooth out, but not correct the situation," the analyst believes. — Unlike wholesale, retail prices are actively restrained by government policy. If the government had not restrained retail, prices at gas stations would have been much higher than they are now."