Russia may introduce long-term restrictions on fuel prices

In Russia, a bill on a long-term restriction of retail prices in Russia for the main categories of gasoline and diesel fuel may come into force, Rossiyskaya Gazeta writes.

It was developed by deputies, including the first deputy head of the State Duma Committee on Energy Valery Seleznev. We are talking about the sale of these products at gas stations. For the first type of fuel, its validity period will be at least three, for the second - no more than five years. Why these particular periods are designated is not specified. This is likely due to the current cost of production. As planned, its specific meaning will be determined by the Government. Also, the measure should reconsider the approach to regulation itself - if now the Russian antimonopoly service ensures that prices at gas stations do not rise above the average inflation rate, now they should not rise above the established ones.

The authors of the document expect that the new law should become an alternative to the damper mechanism (that is, the calculation of compensation to oil refineries), which, in their opinion, does not give a specific result specifically for the consumer. Thus, the developers believe that the new changes will be able to protect the economic interests of citizens and society as a whole. The bill has now been submitted to the State Duma and will be considered at its next autumn session. If adopted, it should be operational starting next year.

Many experts have already criticized the bill. The head of the Russian Consumer Union, Pyotr Shelishch, believes that the measure prescribed in it may cause opacity in terms of the formation of the federal budget. The specialist also did not rule out that in the future this will lead to a shortage of products, since maximum prices will have to be introduced in wholesale, and trade will stop. The head of the National Energy Security Fund, Konstantin Simonov, believes that the new bill could cause a new fuel crisis. He noted that oil refiners and exporters cannot operate at a loss, and in a market economy it is impossible to talk about maximum prices. As a solution to the problem, the specialist suggests using economic methods already in use such as dampers, export duties or similar measures.

Their opinion is also supported by Kirill Rodionov, an expert at the Institute for the Development of Technologies of the Fuel and Energy Complex. He, in turn, proposes three mechanisms that, in his opinion, will ensure a sustainable reduction in retail fuel prices without harm to the consumer. The first is a reduction in fuel excise taxes. Since 2015, he said, they have approximately tripled. He expects that such a measure will reduce refiners' costs. The second is an even sharper increase in the standards for the sale of fuel on the stock exchange - up to 33 of the total production for diesel fuel and 50 for gasoline. Let us remind you that now they are 9.5 and 13, respectively. According to Rodionov, this will tighten competition on the exchange, and therefore reduce exchange prices. He called other advantages that such a measure will make fuel affordable for independent gas stations and traders involved in the resale of fuel to consumers, and will also prevent large chains from raising prices at their discretion. His latest proposal is to ease regional rules for the provision of land for the construction of new gas stations. This, according to him, will cause increased competition at gas stations, but at the same time it will simplify the entry of new “players” into the fuel market.