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There is a seasonal repair for every tax maneuver

03 August 2021

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Alexey Gromov commented to the Oil and Capital publication on the topic of the state and corporate policy in the field of pricing at the domestic market of petroleum products.

Alexei Gromov, Principal Director on Energy studies of the Institute for Energy and Finance, also pointed out that fuel prices on the world market are growing and companies, taking advantage of this opportunity, are trying to make up for the losses they received in the pandemic 2020. To the second factor, he attributed the insufficient efficiency of the damping mechanism, due to which, with serious fluctuations in external prices, economic prerequisites are created for an increase in the wholesale cost of fuel in the domestic market: “The damper is a mechanism that certainly works. Another thing is that it is not perfect in times of too strong price fluctuations and therefore does not give such a pronounced effect that the government would like from it. It is advisable to think about the formulas that are embedded in the damper mechanism, and about their possible correction.

But this process takes time, so now the regulator is hinting that companies need to voluntarily restrain the growth of prices on the wholesale markets, while the government is improving the mechanisms that would help to regulate this situation in a market way,” the expert noted.

He stressed that now there is no need to give up the damper - it is necessary to fine-tune it again: “It takes time, as this process involves negotiations between the authorities and companies. For now, it is necessary to stop the growth of wholesale prices, and the government resorts to methods of manual control, to which the industry representatives themselves are not entirely positive,” Gromov said.

In his opinion, the ban on the export of fuel will help curb the growth of wholesale prices: “Prices for oil products abroad are hitting highs. After the ban, companies will be forced to sell them on the domestic market; accordingly, in this situation there is hope for an excess in the domestic market, which will stop the rise in prices. But any prohibitions and checks are all manual control mechanisms. Now the Ministry of Energy and other regulators should focus on improving the damper mechanism so that such situations are leveled by the market mechanism."

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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