HomeMediaLatest NewsEven if wholesale gasoline prices start to decline, retail prices will gradually rise

Even if wholesale gasoline prices start to decline, retail prices will gradually rise

20 July 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented on the reasons for growing gasoline stock prices in Russia to the Davydov.Index internet portal:

"Now there is a regular seasonal price increase, which was accelerated by relatively low stocks made in the spring. The fact is that prices have been growing quite actively already in the first quarter of the year, in February-March. This forced companies to postpone the accumulation of stocks, and as a result, there is now an increased demand for gasoline. That is, the usual seasonal rise in demand due to summer transportation was affected by the factor of low stocks.

In addition, the situation was affected by the delayed impact of last year's inflation. Then the price growth was restrained, so now we have a delayed effect. I don't think we can talk about the presence of any clear and long-term trend towards rapid growth – prices, of course, will rise, but still in the next 2-3 years they will be kept approximately at the level of inflation. Another thing is that inflation can be considered in different ways.

It should also be noted that we see an increase in wholesale prices, but we have a gap between wholesale and retail prices. Retail prices at gas stations are restrained, and they are still lower than wholesale prices, judging by the first half of 2023.

Here, too, we will see a delayed effect – such an imbalance will not be able to exist for a long time, retail prices will still have to compensate for the growth of wholesale prices. But it won't happen right away. Therefore, even if wholesale prices begin to decline (and they will most likely begin to do so in the fall), retail prices will gradually increase."

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