Fuel is getting cheaper for companies, getting more expensive for people: what is happening with gasoline prices
- Alex Budris Forbes Editorial
Copy link
Photo by Sefa Karacan/ReutersThe wholesale price of gasoline has been nervous since the beginning of spring: it grew in March, and began to decline sharply in April. Experts attribute this hectic movement to the influence of large vertically integrated oil companies (VIOCs). The end consumer did not notice the price jump: thanks to the efforts of the regulator and the same vertically integrated oil companies, the price of a liter of gasoline at the gas station has been growing steadily, but has increased since the beginning of the year by only a little more than 1%
Prices for motor fuel on the St. Petersburg International Commodity Exchange (SPIMEX) in March increased by 7-16% depending on the type of fuel, but began to fall on April 4. As of April 19, there was almost a collapse: AI-92 gasoline fell in price by 13%, to 47,919 rubles per ton, AI-95 – by 18%, to 54,485 rubles per ton, diesel fuel – by 7%, to 61,616 rubles per ton. Over three trading days, April 20, 22 and 23, prices rose slightly (for AI-92 – by 3.6%, for AI-95 – by 2.5%, for diesel – by 1.6%), but by the very next day prices went down again and already on April 25 dropped below the levels from which the rise took place.
This leapfrog did not in any way affect the price tag that the consumer saw at the gas station: according to the latest Rosstat data, on April 22 at Russian gas stations, AI-92 gasoline cost 50.82 rubles per liter, having risen in price by 0.1% compared to the previous week and by 0.4% by the end of March. For AI-95 gasoline, which on April 22 cost 55.62 rubles per liter, the increase was 0.1% and 0.6%, respectively. Diesel, which cost 65.13 rubles per liter, rose by 0.1% compared to the previous week and by 0.7% by the end of March. Compared to January, prices for AI-92 gasoline at gas stations rose by 0.5% by April 22, for diesel fuel they increased by 0.3%, for AI-95 – decreased by 0.5%.
Telegram channel Forbes.Russia Channel about business, finance, economics and lifestyle Subscribe
The Troubled Exchange
Fuel prices usually rise in March due to the start of spring field work, but in 2024 the exchange reacted not only to the seasonal factor, but also to force majeure events such as drone attacks and floods in the Orenburg region, Forbes’ interlocutors explain.
What is the reason for the March rally? Official data from Rosstat show a decrease in gasoline production for the first quarter of 2024 to the first quarter of 2023 by 1.3%, to 11 million tons. In March, production decreased by 3.6%, to 3.51 million tons, compared to 3 .64 million tons in February. Diesel fuel production in the first quarter of 2024 compared to the first quarter of 2023 decreased even more – by 5.7%, to 21.9 million tons, although in March diesel production increased by 5.2%, to 7.32 million tons, from 6 .95 million tons in February.
Gasoline production in March reached a local minimum, which approximately coincided with the maximum at wholesale prices, says Finam FG analyst Sergei Kaufman. At its peak, according to his estimates, about 15% of the refining capacity in Russia was temporarily out of order for various reasons. “At the same time, shortages are avoided,” explains Kaufman. “A ban on the export of gasoline was introduced in a timely manner, and historically Russia exported just about 15% of production.”
The decline in prices since the beginning of April was caused by both the restoration of production and export restrictions. The drone strikes primarily targeted primary processing plants, which Russian companies can repair on their own in a relatively short time, Kaufman emphasizes. One of the damaged installations at the Ryazan Oil Refinery has already been restored, and a representative of the Ministry of Energy stated that by the summer all retired capacities can be repaired. In addition, Kaufman adds, some refineries are increasing gasoline production by reducing the output of another component of primary oil refining – toluene. Due to these factors, the expert says, from April 8 to April 14, gasoline production increased to 121,000 tons per day, which is close to the normal level.”
Material on topic
Shadow of the Big Water< /h2>
Fluctuations in exchange prices were also affected by the catastrophic flood in the Orenburg region, due to which the Orsk Oil Refinery was temporarily shut down on April 7.
On April 11, the government recommended that vertically integrated oil companies reduce purchases of petroleum products from each other through the stock exchange, recalls Maxim Khudalov, chief strategist of the investment company Vector X. “This measure is needed to prevent large players from driving up prices with their sudden appearance,” says the expert. “The exchange is for small players, and let the titans trade directly, avoiding pressure on the exchange.”
It was the intervention of the “titanium” that, according to Khudalov, could lead to an increase in stock prices on April 20-23. “VINKs have direct contracts for mutual supplies of gasoline for their gas stations,” he explains. — It is not profitable for the conventional Gazpromneft to transport gasoline from the Moscow Refinery to its gas stations, for example in Chelyabinsk. It’s easier to get gasoline from RussNeft at the Orsk Oil Refinery. But as a result of the sudden shutdown of the Orsk Refinery, one has to either buy gasoline from private oil depots, which is expensive, or buy large volumes on the stock exchange, which, of course, gives a daily increase in the volume of purchases and raises the price. That is, the problem is the unplanned nature of these actions, which in a not very liquid market lead to an increase in quotes.”
Judging by Rosstat, gasoline production is already partially recovered in the week of April 8-14, notes independent analyst Alexey Kokin. “I think that the recovery in processing will continue and will mostly be completed by the middle of the year,” he believes.
Material on the topic
Stable retail
Exchange passions did not affect the retail cost of fuel, it has been growing slowly but steadily since the beginning of the year.
“Current wholesale prices do not threaten the retail market,” notes Finam’s Kaufman. — Since the beginning of the year, the increase in retail prices has been slightly more than 1%, which is below the level of general inflation in the country. I believe that by the end of the year, the increase in retail gasoline prices will not exceed 5-6%.”
The task of keeping prices at gas stations in the coming years at a level not exceeding inflation was set by First Deputy Prime Minister Alexander Novak. Compliance with this regulation is monitored by the Federal Antimonopoly Service (FAS), which reported in March that oil companies have increased supplies of petroleum products to the domestic market and have committed to increasing additional supplies of fuel to the stock exchange by the end of March. Companies that inflate prices risk being punished by the FAS. For example, in February, the FAS authorities opened two antimonopoly cases in connection with an unjustified increase in prices by enterprises in the Kirov region and Khakassia.
Material on the topic
-
Alex Budrys
Forbes editorial staff
#gasoline # diesel #Gas station Forbes newsletter The most important things about finance, investment, business and technology Subscribe Copy link Share Add to favorites Materials read by Marusya – voice assistant from VK Listen Mode for the visually impaired