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Why is gasoline cheaper at large gas station chains

30 September 2024

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

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to the Neft and Capital Internet portal on the current situation with retail gasoline prices in Russia.

"Vertically integrated companies can hold prices at gas stations due to the fact that they have payments from other segments that can cover losses from fuel sales under current conditions. But the independents are working on the verge of profitability. We already said a few months ago that the rise in wholesale prices sooner or later translates into retail. That's what's happening now," Alexey Gromov said.

The expert added that with the end of the summer holiday season, tensions in terms of consumption are decreasing, which means that the rate of price growth will decrease. But as long as there is a high price in wholesale, the cost at the gas station will still slowly creep up. In many ways, everything will be determined by the general situation with fuel supply. It primarily depends on the physical availability on the bases and on the wholesale prices.

"We have a problem that is embedded in the wholesale prices at oil depots in the form of risk. We are talking about systematic attacks by Ukrainian UAVs, and not so much on refineries as on oil depots. There is no open information about the damage, no one can estimate the scale now.

Independent gas stations have no choice, they will raise prices. Vertically integrated companies may suffer for some time, but with some time lag they will also "tighten" prices. If threatening growth begins, the government can intervene — ask large companies to keep prices down. However, the manual control element has not yet been turned on," Alexey Gromov summed up.

 

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