Nationalization or Liberalization: How to Stop the Continuous Rise in Gasoline Prices

April 27 2021 14

Prices for gasoline and diesel fuel in Russia have been growing for several months in a row. Given that there is a sowing plant on the nose, this can be a big problem. The government is considering a scenario of limiting the export of motor fuel abroad, but a number of independent experts believe that this is a half-measure that will only have a temporary effect. What are the options for solving a problem so important for the country's economic development?

Russia, one of the largest oil-producing countries, is unique in that the prices of oil products in our country are in no way linked to the quotations of "black gold" in the world. It doesn't matter if they rise or fall, for domestic motorists the price tags at gas stations will rise in any case. Why is this happening?

It's all about the system of internal pricing for motor fuel, which is regulated not so much by the market as by the state. It is estimated that 70% of the cost of 1 liter of gasoline at a gas station is made up of excise tax on fuel, VAT, MET and refinery costs for production and transportation. To this must be added the wrap up that the owners of the gas station do. The share of the cost of oil itself in the cost of oil products sold is about 7%. It is also necessary to take into account inflation, since, according to the established rules, motor fuel prices should rise within 1-2 percentage points below the inflation rate. According to the Central Bank, as of March 2021, it was officially 5,79%.

Since the beginning of the year, oil quotes began to grow significantly, but world markets should not have had a negative impact on the Russian one because of the so-called damper. According to this mechanism, the state compensates oil workers for part of the price in the form of negative excise taxes if the export price of raw materials is higher than domestically. It is believed that this allows companies to sell motor fuel in Russia at no loss. Conversely, if the export price is lower, then the refineries must compensate for the difference in the state budget. Remember, last year oil prices fell radically, but domestic motorists did not notice it? It's all damper.

We seem to have figured out the unusual pricing mechanism, but it is still not clear why then domestic prices began to grow so strongly? It's even more interesting here.

On the one hand, oil companies blame everything on “seasonal and climatic factors”. This refers to the abnormally cold winter of 2020-2021, as well as preparation for sowing, which will require a large amount of motor fuel and lubricants. On the other hand, according to independent experts, the government itself is to blame for the rise in gas station prices, which regularly raises excise taxes. Indeed, business is a business in order to earn money, he will not be involved in charity. Once costs have risen, oil companies, refineries and gas stations will shift their costs to the end consumer, that is, motorists, as well as farmers and everyone else.

In this context, it is curious how the government intends to deal with the fuel crisis. And the recipe from Prime Minister Mishustin, a native of the Tax Service, is rather unusual. First, in mid-April, the state allocated an additional 20 billion rubles for additional payments to oil companies within the framework of the damper mechanism. Now the Cabinet of Ministers is considering options to limit the export of motor fuel abroad. This should stabilize the situation and stop the rise in gasoline and diesel prices. However, it seems that the government is not fighting the cause of the disease, but its symptoms. Instead of reducing excise taxes, it intends to increase the standard for the supply of petroleum products to the domestic market for producers from 11% to 15%, as well as increase the amount of compensations from the federal budget for oil workers working in Russia. At the same time, other scenarios are also possible to resolve the problem with the fuel crisis, which regularly gives rise to relapses.

There are two mutually exclusive approaches. According to the first, the fuel market should be liberalized as much as possible. The state should enable new companies to build refineries, most likely compact ones, in the regions. Large players will then have to make room, but more supply will appear on the domestic market, which will lead to lower prices at gas stations. According to the second, diametrically opposite approach, the authorities should nationalize the entire oil sector of the country, creating something like Nefteprom by analogy with Gazprom. The emergence of a single monopoly would allow the state to centrally regulate motor fuel prices and not resort to a rather strange damper mechanism.

Instead, the government continues to maintain a bizarre symbiosis of several private oil companies and the federal budget. Whether such a scheme is justified and beneficial to our country is a big question.

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Sergey Latyshev

0

April 27 2021 12: 50

something familiar .... Chernyshevsky: "what to do", Solzhenitsyn "how to equip Russia", etc.
The reality was not influenced in any way
Bulanov

0

April 27 2021 13: 18

It is high time to create the state corporation of the Federal Reserve, where to trade the prices set by the state for both fuels and lubricants and food.
1. trampoline instructor
  
  0
  
  April 27 2021 14: 00
  
  About 35-40 years ago, "state-set prices for food products" were already passing.
  And money was endlessly changed, and large bills were confiscated, and coupons were printed. In the end, the products ran out.
  By the way, already this year they began to regulate the prices for butter, eggs and sugar, but then it came to light that the products would disappear, but no one would sell them "at the prices set by the states".
  And now this regulation seems to have been abandoned.
  1. Bulanov
    
    +2
    
    April 27 2021 14: 52
    
    And no one is calling for the abolition of other forms of ownership! Let the private owner sell its own, and the state - its own. In Zap. Europe also changed money and printed coupons. And in the United States, food is still issued with ration cards, but not to everyone.
    Socialism is not to blame for the lack of products, but those who ruled the country at that time. In China, under socialism, there is everything and salaries are possibly more than they were in the USSR. Why does it happen? Was the party swagger to blame or something else?
    1. Oleg Rambover
      
      -2
      
      April 27 2021 15: 40
      
      Quote: Bulanov
      Socialism is not to blame for the lack of products, but those who ruled the country then.
      
      Some (the economist Ludwig von Mises) argue that socialism is the cause of scarcity. Read about the calculation argument.
    2. trampoline instructor
      
      +2
      
      April 27 2021 20: 32
      
      China has everything under socialism
      
      Who told you that there is socialism in China?
      "Not everything is gold that glitters" = "Not everything is socialism, where the red flag is."
      In my opinion, in China there is capitalism with the strongest material stratification of the population. And the portraits of the leaders, but they do not deceive me.
    3. 123
      
      +2
      
      2 May 2021 21: 22
      
      Is it socialism in China?
steelmaker

+1

April 27 2021 13: 26

The article describes in detail what a mess we have. And this mess was not created in order to eliminate it, but on the contrary, to make it more convenient to steal.

In mid-April, the state allocated an additional 20 billion rubles for additional payments to oil companies within the framework of the damper mechanism.
trampoline instructor

+3

April 27 2021 13: 52

I don't have a car, maybe I basically do not want to have it, therefore I look at the problems of motorists completely detached.
I'm used to the fact that in this country a lot is beyond common sense and understanding.

40 years ago, a ride in the Moscow metro cost 5 kopecks, and now it costs 60 rubles. (rises every year).
At the same time, 1 kW of electricity cost 4 kopecks, and now in the Moscow region - 5.73 rubles. (rises every year).
In Russia, which possesses huge reserves of natural gas, a third of the population does not have it and is heated with wood. (This fact KGBE recently became known to the president and surprised him very much).
In my district center near Moscow, a trip in a Mostransavto bus around the city costs 58 rubles, and a taxi ride costs from 100 rubles, so even my neighbors, schoolchildren, go to school in the morning by taxi, which makes up more than half of the vehicles on the streets of the town.

I cannot explain all these phenomena from the point of view of pure reason, because there are two options - either take it for granted, or go crazy. I chose the first one, without explanation.

At the same time, I sometimes recall the biblical parable about Moses, who led the Jews in the desert for 40 years, and sadly state that I will hardly live until 2040: that year, forever zeroed Moses II will only be 88, and I can only bequeath to my grandchildren never listen to his promises and "messages to the federal assembly."
1. 123
  
  +2
  
  2 May 2021 21: 27
  
  I cannot explain all these phenomena from the point of view of pure reason, because there are two options - either take it for granted, or go crazy. I chose the first one without explanation.
  
  Did everything suit you until 2000? Have you had any mental health problems? Of course, prices did not grow and there was no inflation?
  By the way, during the past as a helmsman, as a rule, schoolchildren did not take a taxi to the buloshnaya. And before him, too, since the Brezhnev era, as far as I remember, everyone was walking on foot with a knapsack on a hump. To what the tyrant brought the people
Jacques sekavar

+3

April 27 2021 14: 12

Prices are growing not only for gasoline - for everything, but the so-called. “Indexation” is marking time and, unlike the PRC, it does not increase either purchasing power or the standard of living. The question - why, should be addressed to the chief accountant of the Russian Federation - Mr. Siluanov and the head of the Central Bank of the Russian Federation - Mrs. Nabiullina, who was recognized as the best leader in her industry for a reason, as at one time and Mr. Kudrin.
Such great and honored people know exactly the answer why in the largest oil-producing state gasoline is one of the most expensive in the world and why, with all natural minerals in almost unlimited quantities, the production sector suffers from chronic anemia, and the income level of the population is incomparable even with the Persian states. gulfs that have no other resources in addition to oil and sand in the desert.
1. 123
  
  +3
  
  2 May 2021 21: 48
  
  Prices are growing not only for gasoline - for everything, but the so-called. “Indexation” is marking time and, unlike the PRC, it does not increase either purchasing power or the standard of living. The question - why, should be addressed to the chief accountant of the Russian Federation - Mr. Siluanov and the head of the Central Bank of the Russian Federation - Mrs. Nabiullina, who was recognized as the best leader in her industry for a reason, as at one time and Mr. Kudrin.
  
  I have nothing against what was said, but in my opinion you are overly idealizing the PRC.
  
  Such great and honored people know exactly the answer why in the largest oil-producing state, gasoline is one of the most expensive in the world and why, in the presence of all natural minerals
  
  Here, let me disagree, we are still far from the highest prices. Please see the link. And if you also consider that most of the price is excise tax, then you are more likely to claim the level of taxation.
  
  https://ru.globalpetrolprices.com/gasoline_prices/
  
  the manufacturing sector suffers from chronic anemia,
  
  It is what it is With the existing global financial system, the problem is difficult to solve. The country is consistently cut off from funding from abroad, and the local Central Bank is, in fact, deprived of the right to print money just like that.
  
  the level of income of the population is incomparable even with the states of the Persian Gulf, which, apart from oil and sand in the desert, have no other resources.
  
  Even with the Gulf states? This problem is easy to solve It is enough to declare as citizens a part of the population comparable to, say, Saudi Arabia, and declare the rest as migrants as migrant laborers without rights. Let's get an Arabian tale. Then we'll heal If, of course, we fall into the first category
  Something like this
AICO

0

2 May 2021 09: 05

- Deratization from rats !!!
123

+2

2 May 2021 21: 21

Will the excise tax be cut and the gasoline prices will stop growing? Are you seriously? Their conscience will not allow them to do this, or a feeling of deep moral satisfaction?
If you remove the excise tax, then tax revenues will fall out. In my opinion, this tax is fair, you consume more, pay more. What are you planning to replace them with? To impose some kind of new tax on everyone without exception?

The state should enable new companies to build refineries, most likely compact ones, in the regions. Large players will then have to make room, but more supply will appear on the domestic market, which will lead to lower prices at gas stations.

And now they are not allowed to build factories? There is a shortage of fuel in the Far East. Trktnev is sad, says there are no volunteers

https://www.interfax.ru/russia/750225

They all want tax breaks for 300 years and government co-financing of 99,5%
A small candle, sorry refinery is great, but how cost effective it is and whether they can live up to modern standards is a big question. I would like to listen to the opinion of experts.