''It is idiocy to fight against increase in gasoline prices by increasing taxes!''

Russian government asks oil companies to fix fuel price, but experts do not believe in the effectiveness of measures taken

''It is idiocy to fight against increase in gasoline prices by increasing taxes!'' Photo: riamotor.ru

Gasoline prices continue to grow steadily. Fuel excise taxes have already been reduced. Discussions are underway on how to deal with export duties, which can be both increased and reduced. The first agreement — to fix the price of fuel at the level of how much it cost on 30 May — has already been achieved. Representatives of the industry express dissatisfaction with the options the government is discussing, for example, a reduction in excise duties or export duties, offering radical ways. Read the details in the material of Realnoe Vremya.

New rise in prices

A sharp rise in fuel prices in Russia has been going on for several months, and recently — weekly. The prices of gasoline have risen in price almost by one rouble in a week: AI-92 – in average by 94 kopeks, AI-95 — by 93 kopeks, as indicated by data from Thomson Reuters Kortes. The average price of diesel fuel increased by 90 kopeks. According to Rosstat, the cost of gasoline and diesel fuel increased by 80 and 81 kopeks in average.

''We are the oil and gas power and should take into account the interests of our economy,'' Dmitry Kozak explained to media representatives. Photo: politposte.ru

''There was an agreement, and now it has been announced again''

Federal authorities have finally begun dealing with fuel prices, which have not stopped growing since the end of last year. The Russian government agreed with oil companies on fixing gasoline prices at the level of May 30 in response to the reduction of excise duties. It is known that at the end of the month, Deputy Prime Minister Dmitry Kozak met with representatives of the industry — the companies guaranteed that they would fix the prices. However, experts on the condition of anonymity report that before that some filling station chains had raised prices.

At the same time, excise taxes have been reduced from 1 June: for gasoline — by 3,000 rubles per tonne, and for diesel fuel — by 2,000 rubles per tonne. It is possible that the planned increase in excise duties from July 1 will not take place. But a reduction in the price of gasoline or diesel fuel is not expected. Due to the reduction of excise duties the country's budget will lack 140 billion rubles. How to bridge the deficit — they will decide in the autumn. Despite the losses, this step was taken to reduce the tension in the society. For example, a rally on June 1 against increase in prices for gasoline took place in Ulyanovsk, many other regions also joined the action.

''It is impossible to demand a reduction: again, we live in market economy. We met with the largest oil companies — thirteen companies. They are also citizens of our country, national companies. And they understand that today, in the summer, it is not only a burden on motorists, ordinary citizens. This is a significant financial burden primarily on agriculture and diesel fuel consumers. In general, the oil and gas industry understands the fact that we have to balance, we are the oil and gas power and should take into account the interests of our economy,'' Dmitry Kozak explained to media representatives.

Experts call the measures taken by the government strange and do not think that it can radically affect the situation. The agreement on nonincreasing prices also existed before.

''Yes, there was such agreement and now it has been announced again. The companies have committed to keep prices at the level of May 30, to stabilize them, such conversations constantly take place. I'm not sure that there had been an agreement to keep prices just before the election of the president of the Russian Federation. It was before and now it is again. This situation has nothing to do with the market. This is very difficult for those companies that do not have their own refineries, their production and export. That is, 60% of our petrol stations are owned by companies that buy gasoline and diesel fuel from other, larger ones at the stock exchange or without the exchange. They suffer the most. Because if some large company with its refineries has the possibility to export oil and petroleum products, it compensates its losses in oil refining and sales through exports. But other companies, which are the majority, do not have such an opportunity. They have to raise the price because otherwise they will simply go bankrupt,'' says Mikhail Krutikhin, a partner of Rusenergy.

''I'm not sure that there had been an agreement to keep prices just before the election of the president of the Russian Federation. It was before and now it is again. This situation has nothing to do with the market,'' Mikhail Krutikhin believes. Photo: dsnews.ua

''Vicious circle from which they take away everything that is possible''

The expert does not consider the government's possibilities to ''negotiate'' with oil companies real and necessary.

''What does 'to negotiate' mean? It means to command the prices. They see that they have -12% in oil refining, they see that the government introduces more and more new excises, that is, how much can be taken away, that much they take away. This does not depend on the price of oil in the world market,'' Mikhail Krutikhin explains the position of oil companies.

In the price of gasoline, the cost of oil on the world market is about 6,5%, ''and all the main, namely 65%, is taken by the government in the form of taxes and excises. Who is to blame? Not oil, not the price of it, not oil refiners, not oil companies. The government is to blame, all claims to it, to its taxes. It is a vicious circle, first, they take everything they can in taxes, then the population becomes indignant, excise taxes begin to decrease, all of this calms down, and then taxes are increased to the maximum. And then again, everything is repeated in this circle,'' the expert explained the pricing principle.

It is necessary to remove the excise tax completely and to close the export

Vladimir Karpov, head of the department for oil and oil products sales of Tatneft, has not changed his position two weeks after the last communication with the correspondent of Realnoe Vremya.

''It is necessary to completely remove excise taxes and open the market, to deregulate the prices. Before that, they had not been deregulated, they were regulated. If I was the government I would close the export, would take some limitations about it,'' says Karpov.

He cited an example from the Soviet times, when there were periods that from April to October exports were closed. The decision to reduce excise taxes and talks about export duties, which can both be increased and reduced, are rather doubtful for him.

''We are thrown from one extreme to the other. The announced measures will not have the effect,'' Vladimir Karpov commented on the situation to Realnoe Vremya.

Mikhail Krutikhin, a partner of Rusenergy, agrees with the colleague, he believes that until June the agreements adopted will somehow be able to slow the growth of prices, but then ''it's as much as a cat needs two tails''.

The announced proposals ''to imit appetites'' also raise doubts.

''What does it mean to ''limit appetite''? Companies that produce oil lose 12% of their profits during processing. In fact, it is a net loss. How will they compensate for it?'' Krutikhin argues.

Irek Suleymanov expects that the situation can change, but we need to be patient. Photo: tatar-inform.ru

''It is necessary to reduce taxes to stabilize the situation''

Let's take, for example, last year's tax maneuver, when it was promised that they would increase the tax on mining, and then reduce, and then completely nullify the export duty. ''In the end, no one cut it. And now they are going to introduce an export duty on oil products. It is idiocy to fight against increase in gasoline prices by increasing taxes! It is necessary to reduce the taxes that the government takes to stabilize the situation, it has long ceased to depend on oilmen,'' says Mikhail Krutikhin.

President of the Association of Petroleum Products Enterprises of the Republic of Tatarstan Irek Suleymanov expects that the situation may change, but we need to be patient.

''A meeting of the Russian Fuel Union was held on May 31. On May 30, it was a meeting of the Exchange Committee in the FAS of Russia, I also attended it. Everywhere the picture is the same, everyone understands perfectly everything, the reasons for this situation are also clear: this is the tax maneuver, excise taxes, and export alternative, and the exchange rate, and the price of oil. All together gives such an effect that the price of petroleum products is growing today. But we can't escape this. There is one problem, first of all, for us, private filling stations. Oil companies have promised to stop retail prices, and everyone understands that it is possible to freeze the prices only for no more than a month. How the market will behave is unknown. Retail prices in this period are unlikely to be less. Now retail prices are equal to wholesale ones, there is no margin,'' Suleymanov commented on the situation to Realnoe Vremya.

According to him, the government hopes that the oil price will decrease, but it would seem that it is absurd, we also benefit from the high price of oil. ''But if it starts to get cheaper, it means that prices will stabilize in the domestic market. An unprecedented step in the form of lower excise taxes, we think, will affect the market, will benefit, the price in retail will stop growing, wholesale prices will become cheaper. There is the option B, which is not yet reported. It is possible that they work with the duties, I suppose, perhaps, the government should have an option. Otherwise, it is impossible to work, 50% of filling stations in the country are private,'' the expert says.

By Yulia Kosolapkina
Tatarstan