Retail price increases will be halted, but this will not lead to significant price reductions.
However, first and foremost, the government is monitoring retail prices. At gas stations, the average cost of gasoline has increased by 2.77% since the end of last year. The growth rate has effectively caught up with the national average inflation rate, which reached 2.78% by March 23.
Experts interviewed by RG believe that the reaction to the export ban will be unequivocal. Exchange prices will slow down their growth and may even decrease. Retail price increases will pause, but not lead to significant reductions. Their dynamics will align with inflation, but not more than that. However, the end of summer and autumn lie ahead, when prices typically rise significantly faster than in spring.
The export ban leaves the producer with no choice in whom to sell their goods. Earlier, there was an external market with higher prices and a domestic market with lower prices, but now there is no choice. Moreover, the external market is closed, meaning that all volumes intended for it remain within the country—supply exceeds demand. Therefore, producers are left with no option but to lower prices, albeit temporarily.
In a conversation with RG, Yuri Stankevich, Deputy Chairman of the State Duma Energy Committee, noted that the export ban is a rapid response tool that can temporarily stabilize the market but does not address structural problems. For consumers, it means a pause in price increases, rather than a noticeable decrease. For the industry, it is yet another factor of uncertainty.
Everything has changed—from supply directions to geopolitics. According to Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council of the "Gas Stations of Russia" competition, a full export ban is a necessary measure from a market stabilization perspective, but strategically incorrect. Instead of stimulating oil refining and creating conditions for oil companies to increase the depth and volume of processing, we are closing exports. We are becoming unreliable suppliers of petroleum products on external markets. Given the established prices, we are not earning from petroleum products, though we could. We are forced to rely solely on crude oil for earnings.
As noted by Managing Partner of NEFT Research Sergey Frolov, given the unpredictable situation with potential unscheduled refinery shutdowns, a lack of substantial gasoline production reserves, and seasonal demand growth, the export ban will only slow down price increases. There is no reason to expect significant reductions. This applies to both wholesale and retail.
The fact is that, from a profit perspective, most large refineries in our country have not focused on the domestic market but rather on exports. This is simply because half of the oil and petroleum products produced in our country are exported. It is much more profitable to export processed products with added value than raw materials. This perspective has been encouraged by the state's fiscal policy. The large tax maneuver (BTM) reduced the export duty on oil and light petroleum products (gasoline, diesel, jet fuel) to zero (ending in 2024) but increased fees on gross oil extraction. This means that oil is extracted, taxed, and added value is generated through the production of gasoline and diesel intended for export.
It is possible to manage the periodic fuel crises within the country with export bans, but the only way to "cure" them is by increasing gasoline and diesel production. When these resources are sufficient for both the international and domestic markets, especially since the resources are available. However, no investor will invest in building a new refinery, knowing that their market, i.e., profit realization, could be blocked at any moment.
As Frolov points out, since the beginning of the tax maneuver, investments in oil refining have been unattractive, and in conditions of manual management and unpredictable geopolitical factors, the investment attractiveness of oil refining has fallen into negative territory.
Oil refining is a capital-intensive business with a long investment cycle, Stankevich emphasizes. The industry is extremely interested in predictable export and tax policies, stable margins, and uninterrupted transport infrastructure operation. When the export window is periodically closed, particularly during favorable external conditions, companies lose profits, which inevitably reduces investment profitability in modernizing refineries and recovering from continuous drone attacks, he believes.
In the short term, bans even demotivate increasing fuel output when internal prices become less attractive than export alternatives. In the long term, increasing processing is achieved not by bans but through technological modernization, tax incentives, stable export supplies, and the development of domestic demand, Stankevich asserts.
According to Sergey Tereshkin, General Director of Open Oil Market, the industry as a whole needs new solutions to boost the profitability of oil refining and thereby reduce price pressure. As an option, the federal component of excise taxes could be reduced: currently, 74.9% of gasoline and diesel excise tax revenues go to regional budgets, while 25.1% goes to federal. A reduction of excises by a quarter would improve the economics of oil refining. Regarding investment prospects in the sector, guarantees for the safety of fuel infrastructure and the lifting of external restrictions on importing equipment for refineries are crucial. Without these, it will be challenging for companies to steadily increase fuel output, and for regulators to ensure price stability.
Source: RG.RU
