HomeMediaLatest News This is not diesel: why gasoline is getting more expensive after the export ban, and diesel fuel is getting cheaper

This is not diesel: why gasoline is getting more expensive after the export ban, and diesel fuel is getting cheaper

11 March 2024

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department
Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Marcel Salikhov, President of the Institute for Energy and Finance, Director of the HSE Center for Economic Expertise, and Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to the newspaper Novye Izvestia on the impact of the gasoline exports ban from Russia on the prospects for rising prices at the domestic market.

Marcel Salikhov notes:

— Last year, the decision to ban exports was belated. It was accepted in the fall, and the price increase has already occurred in the summer. And now the government, taught by bitter experience, is trying to act ahead of the curve.

Despite the fact that 80% to 90% of all gasoline produced in the country is consumed on the domestic market, the industry has problems related, among other things, to politics. Not only do refineries traditionally leave for scheduled repairs in the spring, this year there was a critical situation with the Lukoil refinery in Kstovo — a Ukrainian drone strike permanently disabled the capacities that provided gasoline to Moscow and the Moscow region. 200,000 tons of fuel, or 5% of the total supply, have been lost to the market, no one knows for how long, Alexey Gromov says:

— There was an incident there in January. The repair period was called a month and a half, but the real time is increasing at least twice. And based on the fact that the government understood that the final restoration of gasoline supply is not expected until the end of spring or early summer, and this decision was made to hedge against a possible price increase.

If the ban were not adopted, Alexey Gromov believes, gasoline would grow at the same rate as diesel fuel a year ago. The good news for the market is that there is no increase in gas station prices, not a decrease in them.

There is a big difference between diesel and gasoline
Diesel fuel, on the contrary, is an export commodity, Alexey Gromov reminds:

— Therefore, when we tried to slow down not only the price increase, but most importantly the threat of shortages, we stopped exports. In the absence of an export alternative, prices went down. Now, the main gasoline market was and remains domestic, and the ban implies many exceptions, the attractiveness of an export alternative still remains. The export ban is not total in nature, anyway, the possibility of supplying gasoline remains within the framework of export opportunities, and therefore there is still pressure on the market from attractive export prices against the background of a revival in demand. It would be naive to expect that the decision taken in this format will reverse the price increase at gas stations.

Of course, the export price is more attractive than the domestic one. Now this delta has been removed, Marcel Salikhov says, but it concerns only 10% — 15% of the total volume of gasoline sold:

— This decision cannot affect the market in a significant way. The margin difference is small, and the volumes are small. For prices to decrease by 10%, there simply cannot be such an effect.

Will gasoline prices fall? No, they will grow up

Professor Salikhov recalls that the damper mechanism, in fact, was created in order for prices to stabilize and not change either up or down. Ideally, prices for petroleum products should rise at the same rate as inflation:

— The whole logic of the damper mechanism is for gasoline prices to rise approximately at the level of inflation. We have high inflation. It is 7 to 8 percent per annum and, most likely, it will not grow more in the coming months. Therefore, the federal authorities are fighting, raising the rate and so on. Gasoline prices, based on this logic, should rise, but grow without exceeding the overall inflation rate. If inflation is high, about 8%, then we can assume that gasoline prices should rise by 8%.


You will receive notifications about the release of new materials on the site. We do not share email addresses with third parties and do not spam.
Thank you!
Your application is accepted.