The average annual growth of prices on gasoline in Russia in recent years is about 8-9%

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Late last night Deputy Prime Minister Dmitry Kozak held a meeting with representatives of Russian oil companies, which resulted in an agreement to keep prices for gasoline and diesel. So, for the next five months, until March 31, 2019, the supply of fuel to the domestic market will grow by 3% (completely loyal to the decision), while wholesale prices are fixed at the levels of the summer. Beginning in April 2019, the price of gasoline and diesel fuel will be indexed to the annual average of inflation. Protective duties is not entered.
“Manual” control the market immediately gave its fruits: immediately after the meeting of oil refineries across the country began to drop selling wholesale price for the products in real time to renegotiate contract prices with key customers. It is known that a number of refineries “dropped” the price per tonne of product for 1-3 thousand rubles, which by market standards is quite a competitive advantage. Today the calculations of shipments and the shipments are on a flexible price, and it will be until all the major refineries would not be reconstructed to a new level of pricing will not be released in the middle plane.
But it’s that layer of pricing that a consumer will never see. For the consumer it is important that retail fuel prices will remain stable through the joint efforts of government and oil companies. If it works, it will only benefit the retail market and will help to contain overall price increases on products and services, or otherwise associated with the transport component.
Let me remind you that the annual growth of prices on gasoline in Russia in recent years is in the order of 8-9% (in 2017 was 8.7 per cent) in 2018 will be around 10-11% in fact. Next year, I think, the price tags will grow by the same amount, just with a delay and stretching of time – fairy tales do not happen, especially in the commodities sector.
The current temporary measure. Its task is to prevent panic in the retail market. A pause of five months was given to oil companies in order to change the structure of supply and to conduct a thorough study of the market participants, the demand estimation demand to the planting season.
Russia ahead of the at least two stages of increasing gasoline prices. It’s January (due to the VAT increase). At the beginning of the year everything will be smoothly and quietly, particularly if will not increase the excise tax. But the second phase of increase in prices will occur in April, during the active phase of the growing season. Thus, in mid-spring 2019 price growth promises to be more visible.
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Anna Bodrova,
Senior analyst,
Alpari