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A “gas bubble” will burst so that the government will scream: “Help, fire!”

Agreement oil Cabinet and drive the economy to a standstill

Prime Minister Dmitry Medvedev on April 4 held a meeting to discuss the issue of compensation budget costs for compensation to oil companies for supplying the domestic market of motor fuel. According to the Finance Ministry, it takes 120-190 billion.

New agreements with the oil companies on stabilization of the fuel market is already signed, have informed on Friday to journalists Deputy Prime Minister Dmitry Kozak.

At the urging of oil companies, the government decided to reduce the level of target prices for gasoline in the formula of the damper 56 thousand tons to 51 thousand rbl./t, diesel fuel — 50 thousand rbl./t to 46 thousand rubles per ton, said”Interfax”. This is the second adjustment of the damping mechanism due to the decrease in target price.

In November last year an agreement on stabilization of the fuel market signed by the government, vertically integrated oil companies and independent participants.

“The agreement with the oil workers stated that from 1 January the rate of growth of prices at the pump should not be higher than 1.7% (given the increase in the VAT rate) and from 1 February — not higher than the forecast average inflation rate”, — reports the Agency.

Meanwhile, recently the State Duma rejected in the first reading two draft laws that introduce state regulation of prices on motor fuel.

Faction “Fair Russia” has proposed his bill to establish that retail prices of gasoline, diesel, aviation kerosene, benzene and some derivatives and other components of the fuel cannot exceed the inflation rate, which is approved annually when adopting the budget of the Russian Federation.

“So we offer assistance to the government, which once again are unable to fix with oil, projected increases in fuel prices,” — said Deputy head of the faction Oleg Nilov.

The MP stressed that the objective of the bill is to protect the consumer. Rising fuel prices and indirectly rising prices for everything from agricultural products and ending with the plane tickets and for any form of transport for any services, goods or otherwise, depends on inflation, he said. Thus, according to him, already recorded growth in the price of fuel at the level of 1.7−2%.

“Again, history will repeat last year, when 9%, even 10% was recorded in official increase in the price of fuel?”, — was indignant Oleg Nilov.

The second bill was introduced by deputies from the Communist party Valery Rashkin and Denis Parfenov and introduced from 1 January 2019 state regulation of prices for gasoline and diesel fuel, and retail allowances to the prices on them, by setting them to extreme levels.

“The sharp increase in prices for fuels and lubricants in the domestic market in the first quarter of last year has caused resentment not only of the population (it came out on the square, it was in the pickets, sent in resignation the government of the Russian Federation, traveled to the names of Putin), but the economy has shown a sharp decline, because the prices of fuels and lubricants, they are directly included in the cost of transportation, affect the price of goods on the shelves, and also affect the business for all services,” — said Valery Rashkin.

Against the adoption of the bills was made by the profile state Duma Committee on economic policy.

“From an economic point of view, the restriction of retail prices for gasoline, diesel fuel and other petroleum products may result in reduced profitability and closure of petrol stations”, — voiced his position Committee member Victor Zobnev.

He also recalled that the level of retail prices of petroleum products vary in different regions, so the restriction “imposed on the final stage of the distribution chain, without affecting the production and wholesale link, will have a negative impact on the positions in the development of the industry as a whole.”

What is happening with this agreement and generally with the transition to the current system manual petrol and diesel market is a huge mistake that leads to negative consequences for the market, said SP member of the Committee on energy strategy and development of fuel and energy complex of the RF CCI Rustam Tankan.

— We don’t feel them to the full extent due to the fact that most of the market now occupied by state-owned companies. The company, which is controlled by the state and which, under pressure from Deputy Prime Minister Dmitry Kozak are absolutely non-market policies. But this leads to degradation of oil refining in Russia and, ultimately, should lead to the shortage of fuels and to what we saw in Soviet time, when gasoline cost 20 cents, but I had at 6 in the morning to get up to for dinner to the canister this gas. Thus was frenzied speculation at prices several times higher than the state. This situation for the economy, of course, was suicidal.

What is happening with this agreement, with oil refineries in Russia — a demonstration of the complete incompetence of the leadership of the industry in the first place, of course, from Deputy Prime Minister Kozak, who very strongly took the non-market levers.

Judge for yourself, we have the yield of gasoline into recycled oil last year fell by half a percent. That’s a lot. And so we have the yield of gasoline is one of the lowest in the world.

In addition, thanks to the last renovation of refineries in the country is producing less oil. Last year the drop in production amounted to 9.5%. The production of gasoline has not increased, because no one wants to produce gasoline.

It would be possible to dramatically increase the output of gasoline, but instead increase the production of goods that are not regulated by the state: solvents, various light petroleum products, e.g. jet fuel, which can be an alternative to gasoline in production.

If 10 years ago for gasoline have processed 99% of the oil that enters the refinery, now it is processed 80%. A significant part of oil for gasoline is simply not processed.

We have no import, because the prices are clamped at a level that is that in Russia the lowest retail gasoline prices. And it’s not only about Europe but also Southeast Asia, USA, the countries that are close to us geographically.

Before we had gasoline imports, which served as a kind of lifeline in case of lack of gasoline. As you know, from Belarus in the Central Federal district has supplied significant volumes of gasoline, now it is not deliver at all. From Finland supply gasoline in Leningrad oblast and North-West Russia, now this thread either.

With the end of 2014, when almost two times down the course of our national currency to the Euro, prices were such that we never get lucky. In the far East has always been present gasoline imported from countries in South-East Asia, e.g., South Korea, now its not close.

Now we now hold due to the low level of gasoline consumption per capita, and it is 3 times lower than would be in a normal economy, that is kept only due to their poverty. But what is going on, the Russian government is in fact strangling our economy and work to reduce the life of the population.

I don’t understand how adults can not understand basic things. Enough to call a normal economist, and he will explain on fingers that such an administrative regulation of prices in a market economy. This level is the first course of the Institute of Economics inaccessible to people who make decisions. I was horrified to look at it.

The fact that we have senior level appoint people who have no experience or special education in this area is, unfortunately, the system, and not an accident. I want to remind you the story of “Rosgeologiya”, which has long led the cadets completely destroyed the Geology in our country, the remnants of what was the state of the geological system. Managed to drag myself to a private geological company, which was part of a major oil and gas company.

As a result, last year for the first time in 25 years we didn’t have reproduction stocks, we have opened stocks is less than the extracted oil. Russia has worked very effectively for a long time, more efficiently than in Soviet times, but if you put cadets to lead the Geology, it is possible to kill the Geology. If you put the military to lead the petrol market, it is possible to kill the petrol market. These leaders are deadly for any economy. Oil with this government speak different languages.

“SP”: — can We expect price increases and shortages of gasoline?

— We wait for the acute phase of the crisis. At some point it will surely come. What is the acute phase, the experience. It was already 1996, and 2000, and 2008, now the crisis has been much milder than it was before, due to the management of public companies. The economy will not disappoint.

What is now happening is a huge mistake that will haunt everyone. I recall when in past times administrative regulation brought the economy to a standstill, the regions began to shortage of gasoline and prices have soared for one day in 2-2,5 times. We all it already passed.

Sorry that will suffer not those who make the decision. We suffer with you.

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