Russia » Economics
Author`s name Ольга Савка

Russian and US petrol equal in price

US prices on petrol have been decreasing for the latest two months, though

The retail price on petrol in Russia has equalized with the one in the States and exceeded the level of 15 rubles per liter (50 cents). Spokespeople for Moscow retail companies blame large oil companies, which raise wholesale prices on petrol too high. Oil companies in their turn explain the growing prices with increased tariffs on electric power and railway transportation, the Kommersant newspaper wrote. 

Experts, meanwhile, forecast the continuing rise in petrol prices. Some specialists do not exclude the price on petrol in Russia will soon approximate to the European level and make up one euro per liter by next summer. It may happen in the event the forthcoming rate of increase is preserved on the current level. However, it is not likely to happen. “In case of the further growth people will start driving less,” a report from the Kortes center said.

Petrol retailers say Ai-95 is to make up 16 rubles per liter already. Being afraid of the drop in demand, they promise not to raise retail prices at least before September. Specialists, however, say the prices on fuel will continue growing already in autumn.

A manager of one of Moscow's gas stations believes retail prices in Russia have gained almost 40 percent since the beginning of the year, as opposed to the 8-12 percent growth in the USA. “Oil companies try to gain the maximum margin on the home market, to put it closer to the one they receive from export,” a manager said. The raise of export duties on oil and petroleum products does not reach the desirable goal (to cut the export). Therefore, oil companies increase the price to compensate their expenditure on duties.

According to the Moscow Fuel Association, the average price on Ai-95 petrol at Moscow's gas stations made up 14.83 rubles per liter as of August 16th. The price on the same petrol sold under the brands of large oil companies cost 15.1 rubles. The Energy Information Administration of the US Department of Energy registered the average retail Midgrade petrol price (which corresponds to the Russian Ai-95) on the level of $1.97 per gallon (15.2 rubles per liter). It is noteworthy US prices on petrol have been decreasing for the latest two months.

”The growing petrol prices in Russia depend on the manipulations of oil companies,” Grigory Vygon, the leading specialist of the Financial Research Institute said in an interview with Echo of Moscow radio station. According to Vygon, Russian and US prices on petrol have been quite comparable for recent 18 months. “This is a rather interesting fact, as the USA is the largest oil importer, whereas Russia is the world's second largest exporter. Petrol prices both in Russia and in the USA are similar, although there is a big difference between the two countries,” the specialist said. “Yet, there is nothing surprising about the growing prices. Oil companies can manipulate market prices to a certain extent. They control the processing, oil bases and a considerable part of the retail market. Independent vendors do not have an opportunity to compete with them. They purchase petrol at wholesale prices, which large oil companies set,” Vygon said.

”However, there are certain restrictions here. Oil companies can not double the prices, because the current prices are close enough to the upper limit of the population's purchasing capacity. Oil companies raise prices, but they watch the demand too, as the consumption of petroleum products may suddenly drop, if the limit of the purchasing capacity is reached,” Grigory Vygon said. “I think oil companies are simply trying to compensate the increased tax burden and raised transportation tariffs at the expense of growing prices on the home market,” said the specialist.

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