The gas’s price for the population will increase by 50%. Will the Russians save Gazprom with their money

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented to the newspaper Novye Izvestia on the plans of the Russian authorities to raise domestic gas prices ahead of schedule for all categories of consumers over the next four years.

Alexey Gromov emphasizes:

— A reform has been overdue in the Russian domestic market for a long time, which would be able to turn a fairly capacious domestic gas market in the country, where, by the way, almost 500 billion cubic meters of gas are sold annually, into a full-fledged market instrument.

Currently, there is no full-fledged gas market in Russia. And prices, both wholesale and retail, are regulated by the government. And it turns out that the state is now acting as such a conduit for the interests of the gas industry, related to the rapid increase in gas tariffs for industry and the population, which will naturally affect the growth of prices in the country, may provoke additional inflationary pressure and so on.

And the right solution in this direction would be a gradual transition to a truly full-fledged domestic gas market, where the price of gas would be determined by the ratio of supply and demand.

Then no one would have any questions, because clear and transparent rules of the game in this market would have been formed. Unfortunately, neither the government and Gazprom, nor independent gas producers are ready or willing to switch to such a model of managing the domestic gas market.

Therefore, the simplest, but at the same time the most inefficient scheme is being implemented: faster growth in gas prices for all consumer groups in the next four years.