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Fuel prices rise sharply. Soon

In the beginning of the year prices for gasoline and diesel fuel have grown by 1.7% due to the increase in VAT. But it was laid down in the agreement of the government and the oil companies. Soon we are waiting for another round of fuel crisis.Pole Matthew Specialist

The agreement between the oil companies and the Russian Government to freeze fuel prices is valid until the end of March 2019. And if retail prices at gas stations in January rose 1.5% and 1.7% due to the increase in VAT (this is included in the agreement), then the stock prices are rising much more rapidly: just last week the wholesale price of AI-95 increased by 11.4%. Despite the fact that in the wholesale market purchased only independent gas stations quotes exchanges are a major indicator for retail price at filling stations and oil companies. After the agreement will cease to have effect, it’ll allow the oil companies to Jack up the retail price.

The average prices for Moscow of the gas station on January 10, according to the Moscow fuel Association (marked in red price increase, green decrease), the average prices for Moscow of the gas station on January 10, according to the Moscow fuel Association (marked in red price increase, green decrease)

Another factor in the growth of fuel prices may be the increase in excise taxes. Analytical centre under the Government of Russia has calculated that ceteris paribus increase in its rates would increase fuel prices by 3 rubles per liter.

“In 2019, the contribution of excise tax to gross retail price of gasoline AI-92 will be positive and will be 3.06 rubles per liter, and together with increased VAT — 3.59 ruble — calculated the experts of ATS. — The diesel fuel excise tax contribution to the growth of retail prices will be slightly less — 2.4 rubles per liter, and together with VAT — 3.07 ruble” quoted “the Russian newspaper” the Analytical center under the Government of Russia.

Last year, the contribution of excise duty in the increase of the retail prices of AI-92 were negative (-1,43 RUB), says thinktank, but its overall share in the cost of a litre of fuel is 17.6%.

The government and oil companies are ongoing negotiations. So, in exchange for increased excise taxes the oil companies were to receive funds from the Federal budget that should be directed at the development of oil refineries.

  • The government feared the deterioration of the quality of fuel at filling stations.
  • In the opinion of oil, a rise in fuel prices to blame independent sellers.

Photo: Kirill Kuhmar/TASS

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