At gas stations, gasoline prices are also falling, but the price is significantly lower than in wholesale trade. And although since the beginning of November the drop in prices in retail has accounted for more than a third of the annual increase, the cost of a liter of fuel at gas stations is significantly higher than last year and the beginning of this year. So, for example, according to Rosstat, the average price of AI-92 gasoline was 47.14 rubles per liter. Now: 50.21 rubles per liter. Prices are falling, but are still higher than last year’s values. Diesel in general is becoming more and more expensive, but here at least an explanation can be given: winter diesel fuel is now purchased and its share price is very high.
The main question that arises in this situation is why retail gasoline prices are higher than last year or early this year, although stock prices have fallen. In addition, the ban on winter diesel exports has not yet been completely lifted and fuel production is at a high level. The second question is what will happen to prices in the new year, because from January excise taxes on gasoline and diesel will increase, and the conditions for calculating compensation payments from the budget to oil workers for supplying the market internal (damping mechanism) will also change.
According to the director of the National Energy Security Fund, Konstantin Simonov, fuel at gas stations is now more expensive, as taxes collected from the oil industry are higher. This was partly due to the growth of world prices and partly to the increase in the tax burden.
In order not to be unfounded, let’s open the statistics of the Ministry of Finance of the Russian Federation and compare the budget revenues of November, a record year for the receipt of industry funds in 2022, and this year for mineral extraction. (MET, the main tax on oil companies), says the expert. Last year – 528 billion rubles, this year – 997 billion rubles. Budget payments for the buffer in November 2022 will amount to 149 billion rubles, this year – 193 billion rubles. That is, income increased by almost 470 billion rubles, and expenses by 44 billion rubles. Yes, oil prices have increased, but on average the increase was 10-15% and the industry’s tax revenues have almost doubled. This money was taken from the industry, meaning that costs were redistributed throughout the entire production chain, including the retail segment.
At the same time, as Dmitry Gusev, deputy chairman of the supervisory board of the Reliable Partner association, points out, we now find ourselves in a situation where the wholesale and retail fuel markets exist independently of each other. In retail trade, price increases in our country are limited by the level of inflation, this is closely monitored by the Federal Antimonopoly Service (FAS). At the same time, we understand that the retail price from the beginning of next year will be affected by the planned increase in excise taxes, changes in the payment terms of buffers and the increase in railway tariffs. But price increases will remain within the limits of inflation. Our wholesale trade is more focused on the international market and here prices can fluctuate greatly. There may be ups and downs, but they won’t affect retail much. The buffer mechanism was created so that the world market situation did not cause volatility in retail prices in the domestic market, the expert points out.
Retail gasoline prices do not always follow wholesale prices at the same time; the lag between the dynamics of prices at gas stations and wholesale prices can be at least 1-1.5 months, says Natalya Milchakova, leading analyst at Freedom Finance Global. This is because an adequate period of time passes between purchasing fuel on the exchange and delivering it to gas stations. That is, today gas stations sell gasoline that was purchased on the stock market in early November, or even in the last ten days of October, so retail prices at gas stations and wholesale prices on the stock market are not directly related to each other. Yeah.
The expert’s latest observation suggests that we can expect a new drop in retail gasoline prices. But the cost of diesel fuel at gas stations, apparently, will remain the same at best.
Wholesale prices for diesel fuel in Russia tend to increase very frequently in December, says Milchakova. This was due to several factors, from high global oil prices, which increased export volumes and reduced refining volumes, to repairs at oil refineries. Even though diesel fuel production is increasing, some large companies continue to underutilize their refining capacity, having previously not expected the government’s ban on exporting petroleum products to last so long.
From Simonov’s point of view, fuel prices next year will be influenced by the political agenda. Until March 17, almost no one will allow prices at the gas pump to rise significantly. But miracles don’t happen. If the budget provides for increasing oil and gas revenues by another 30%, this will affect the cost of products produced by the industry. And these are, first of all, gasoline, diesel, fuel oil and jet fuel. What’s more, the “fat” that companies had accumulated (especially independent gas stations that do not belong to large oil corporations) was already wasted in 2023. And this means that next year will be especially difficult for them.
Milchakova believes that in January 2024 the average retail price of gasoline may be around 55 rubles. per liter, for diesel fuel – about 65.5 rubles. (now – 54.56 rubles and 64.27 rubles per liter, respectively).