Growth of excises on gasoline and diesel fuel, increase of the VAT, the tax maneuver transferring the main load of production within the country, as well fresh memories of price crisis in the market of motor fuels of 2018 forced a regular consumer to be afraid of a new jump in prices. Not less concerned government entered a number of tax mechanisms which will help avoiding a new crisis.

Fuel maieutike

The great philosopher Socrates created a training method which is called maieutike. Its main idea is that a teacher leads and a pupil answers and comes to the necessary conclusions. Such knowledge is learned much more deeply than at simple learning. But there are also reefs in this method. If the teacher badly understands the subject and the pupil is rather naive, a false result is deeply learned.
In the field of the Russian market of motor fuels there is one widespread leading question which seems questioning the extremely dexterous, hitting into the essence of a problem. Briefly it can be formulated so: «Why does gasoline price grow in our country when oil becomes cheaper, as well as when it rises in price?» But instead of blow in the essence, instead of helping to understand the situation, this question makes a listener to turn away and blink, disconnecting critical thinking.
First, national currency in our country is Russian ruble. Secondly, prices of oil fluctuate in dollar expression. Thirdly, ruble price of oil started falling in October of last year only. Fourthly, an average Russian gasoline price of AI-95 since the beginning of December on the end of January fell for 66 kopeks — from 46.23 to 45.57 rubles for liter.
Whether it is possible to describe with such a simple (though sarcastic) question all complexity of the Russian market of motor fuels? No. It is obviously not enough one simple question to understand the nature of last price crises and to estimate risks which are born to the market by current year.

Cheap ten

According to the Bloomberg agency evaluating 61 countries, Russia is on the tenth place in the world on low cost of gasoline (in dollar expression). On the first place is Venezuela, then Iran and Kuwait follow. Saudi Arabia was located in the middle of the list, and the United Arab Emirates leaves behind Russia in this rating only a little.
There is a correlation between economic development of the country, existence of essential oil production and level of prices for motor fuel. But essential oil production does not guarantee low prices of fuel. So, on the second place, but in the other end of the list, Norway is located. Though this country also extracts 5.5 times less oil, than ours, but per capita it advances Russia in production recalculation in 35 times. Thus gasoline in Norway is more expensive than Russian in 2.5 times.
Other statistics is given by Global Petrol Prices. Studying the prices in 165 countries, the organization (according to it) leans at least on three sources of information. According to its data, Russia in the middle of 2018 was at the 28th place. At the beginning of 2019 our country rose by the 18th place, having divided it with Tunisia, Pakistan and the USA. By the way, the gasoline price in dollar expression during this time fell on four cents — to 0.68 dollars per liter. However, it does not please a regular consumer at all.
Welfare of people in the different countries differs many times. According to the RIA Rating, availability of gasoline to an average Norwegian is three times higher than for an average citizen of Russia. At the same time gasoline is more available for an average citizen of our country than for an average Czech, Greek or Portuguese citizen. On this indicator we settled down exactly in the middle of the list of the European states, on equal removal both from super successful Luxembourg and super depressive Ukraine.
It does not mean that no problems exist. It only means that our market of motor fuels is remarkable nothing in world scales. Worse than some, it is better than many. Anywhere there is no magic place where gasoline would be distributed just like that.
In this regard it is worth noticing that for the last months on a wave of disturbing expectations of what fuel prices will bring us 2019, the wildest rumors began to be spread willingly. Perhaps, the rumor that China made gasoline almost free was the brightest and, at the same time, the most ridiculous of them. Actually it is on average 1.6 times more expensive than in Russia. And if to consider separately, Hong Kong will appear the world champion on high cost of fuel at all – 2.7 times more expensively than in our country.
It is obvious why China was chosen as an example of «almost free gasoline» — the largest world economy, besides dependent on import of energy carriers. It is a pity that the given example is false. Actually only in Venezuela gasoline, according to Bloomberg, it is possible to call conditionally free — a liter of AI-95 costs cheaper than 10 cents. But Venezuela experiences economic difficulties. Its example does not look so attractive.

Tax share

In 2017-2018 there was a restoration in the world market of hydrocarbons, price of oil grew. After oil also motor fuel began to rise in price. The prices changed unevenly. So, in Europe Ai-95 gasoline rose in price from 1.21 euros for liter in January to 1.24 in April of 2017, and by summer fell in price to 1.17 euros. Then the price slowly grew to 1.23 euros in January, 2018. But since March growth to 1.31 euros for liter began in June 2018. It was the sharpest jump in the last two years.
High prices kept till October and then recession, not less sharp, than growth began in spring. At the time of material writing an average price of AI-95 in Europe made 1.2 euros.
This situation in general is characteristic for other regions of the world. Even for China in which state regulation of the prices is applied. In November gasoline rose in price to 8.18 yuans (79 rubles) for liter and at the beginning of January fell in price to 6.9 yuans (66 rubles) for liter. At the moment the prices started growing again. It is interesting that the regulatory mechanism considers only considerable fluctuations of the world prices for black gold. Adjustments of the prices in domestic market of China happen if oil rises in price more than for 50 yuans and keeps at the new level within ten working days.
Fluctuation in prices of gasoline (and diesel fuel) it is certainly connected with fluctuation in prices of oil. Since the beginning of 2018 until the end of May black gold rose in price for 12 dollars — to 79.5 dollars for barrel and by the beginning of October of the quotation practically reached 86 dollars.
It is remarkable that price of oil grew since the beginning of 2018 to autumn maxima almost on 13%, and gasoline in the same Europe rose in price on 6.5%. Nevertheless oil quotations though are an important factor influencing the cost of oil products but not smaller value is played by tax burden. In the EU a share of taxes in retail price of gasoline often exceeds 60%. According to Vygon Consalting, in 2017 in Germany this parameter reached 64%.
Thus in the USA the tax component is more modest. So, the excise size in the United States is five times lower than in Germany — about 15 cents for liter. According to Vygon Consalting, in America a share of taxes in the price «on stele» fluctuates within 12-20%, however here taxes on oil production are not considered methodologically. Low tax burden results in sharper fluctuation in prices depending on oil quotations than in Europe.
European model is closer to Russia in respect of the taxation. But the structure of taxes differs. According to participants of the market, in the middle of 2018 only the excise and a tax on mining tax on mining occupied 60% in retail price of gasoline. Even taking into account subsidies to oil processing their share reaches 40%. VAT is in a separate line.
There is an opinion that tax on mining should not be considered in structure of cost of fuel as it contradicts world practice. Perhaps, it makes sense for the countries which completely (as Germany) or substantially (as the USA) depend on oil import. But Russia for 100% provides itself with raw materials for oil processing, and the considerable part of oil refineries (oil refinery) belongs to vertically integrated oil companies. Tax on mining makes the most direct impact on prime cost of motor fuels. And it is twice strange to ignore a tax on mining, estimating a share of taxes in the gasoline price at modest 16% if to remember that growth of this tax played not the last role in last year’s crisis.

Rehearsal of 2017

At first price crisis overtook our country at the end of 2017. Practically all forecasts said that in the Russian market in 2017 decline in demand for gasoline will proceed. But stabilization of the world market of oil made the most positive impact on domestic economy. An economic recovery brought to insignificant (1-2%) increase in demand. Not all suppliers were ready to such succession of events, if in 2016 the Russian oil refineries, according to the Ministry of Energy, made 40 million tons of auto gasoline, in 2017 this indicator made 39.2 million tons. Not the last role in it was played by unplanned stops at some oil refineries.
Actually the country faced a lack of offer in domestic market. Extremely effective mechanism — the exchange auction was used to cope with the situation. Sales of gasoline through the exchange in 2017 were increased from 30 thousand tons to 50 thousand tons per day.
Gasoline rose in price almost on 8% for a year. The Federal Antimonopoly Service considered that this way the market won back as the saved-up negative because of an imbalance of supply and demand, as the future increase of excises. If in 2014 the excise made about 4.8 rubles for liter, in 2016 – 7.6 rubles for liter, at the beginning of 2018 this indicator increased approximately to 8.4 rubles. In July it was planned to lift an excise for 50 kopeks.
Government bodies expected that in 2018 fuel prices will grow in inflation limits. But there was another reality. And again ubiquitous dialectics interfered, having turned success into the contrast. After all in our case rate of national currency has impact on the Russian market. Not least it played a dirty trick with the Russian consumer in May of last year.

Threshold and strengthening

In May of last year of gasoline price and diesel fuel directed up. In a number of regions wholesale prices reached 50 thousand rubles per ton — about 37.5 rubles per liter, after wholesale prices also retail directed up too. AI-92, having hesitated for a time, stepped over a mark of 40 rubles per liter. Simple consumers with easy horror waited when the most popular brands of gasoline punch a ceiling in 50 rubles for liter.
Responsible structures tried to use exchange tools again, but their efforts did not bring desirable result. The paradox is that all suppliers expected further increase in demand for motor fuel. Of course, in April and May production of gasoline was lower than for the same period of 2017. Not least it also gave a reason at the first stages of price crisis to speak about a lack of offer in domestic market. But for January-June production grew on 2.3%. Thus for the first five months of current year, according to the Russian Government Analytical Centre, export of gasoline grew on 9.6% (in comparison with the same period of 2017) and diesel fuel — on 5%. Finally also the volume of the exchange auction of oil products increased — for the first three quarters it grew on 4.7%. Whether it was worth using the exchange as the stabilizing factor? Certainly, but the nature of crisis was deeper than an imbalance of supply and demand.
During crisis in the market of hydrocarbons not only the excise grew almost twice. The tax on mining also did not stand still. Let’s remind that it depends on the price of oil of the Urals brand and ruble exchange rate to dollar.
During 2014-2016 oil held in a close corridor 3 thousand plus or minus 300 rubles per barrel. But prompt growth began with the middle of 2017. By the beginning of spring 2018 the price grew approximately on 1 thousand rubles for barrel. Then the sharp growth of the dollar prices of black gold followed. At the same time the ruble instead of becoming stronger against the growing oil, at the beginning of April promptly left a corridor in 55-57 rubles for dollar and stopped at the levels of 61-63 rubles for dollar.
As a result, during April-May oil rose in price on 1 thousand rubles, to 5 thousand rubles for barrel approximately and set historical record.
In proportion tax on mining also changed. In September, 2017 the rate of tax made 3630 rubles, and in May of 2018 it grew to 5.6 thousand rubles for ton.
If tax on mining does not be considered in structure of the price of gasoline, it is necessary to recognize fantastic coincidence of its sharp growth to growth of wholesale prices. Though, certainly, price crisis was the complex phenomenon, an ideal storm therefore it is impossible to shift all responsibility to the unique tax.
But the fact remains — prime cost of gasoline (and diesel fuel) for last year grew. Even if all fuel in these conditions would go to domestic market, it would not revitalize the situation, after all growth of offer did not cancel objectively existing prerequisites for prime cost growth in any way.
The government and the oil companies managed to stabilize the situation only after decrease in excises by 2-2.5 rubles by liter. But even now excises were one and a half times higher than the indicators of 2014. And in summer Deputy Prime Minister Dmitry Kozak declared that nobody refuses the increase of excises planned for 2019. Their size increased on one and half times — approximately on 3 rubles per liter (Euro-5 gasoline).
The rise in price of gas motor fuel became other noticeable consequence of a sharp increase in prices for gasoline and diesel fuel. The rise in price propane-butane was quite expected. Approximately to estimate rise in price prospects, it was possible to take away 9-10 rubles from the actual price of AI-92 and to subtract 20-25% from the received difference. And here the increase in prices for methane (compressed natural gas) became for the market an unpleasant surprise. Especially considerably the prices grew at the end of 2018 — from 14 to 18 rubles for cubic meter. It caused criticism from the Chairman of the Board of Directors of PAO of Gazprom Victor Zubkov. The Management of Gazprom Gas Motor Fuel Company promised to correct current situation.
Refueling business in summer 2018 started suffering from unscrupulous actions of a number of players. Under complaints what even after decrease in excises wholesale prices are too high for many networks of gas station and they should work in minus, in the market there was a problem of an incomplete filling and other forms of deception of the consumer. «Samovars» — illegal oil refineries raised the head. In fall activity of the similar enterprise in the Saratov region was stopped. By estimates of participants of the market, today there are about 300 similar plants in our country.
Oil continued to rise in price, meantime the ruble did not think to become stronger. Both the Chairman of the Board of Gazprom Neft Alexander Dyukov and the Head of Rosneft Igor Sechin called it in question. It is remarkable that in summer the Head of the Central Bank Elvira Nabiullina dropped a hint of doubt in the role of national currency rate in high prices on gasoline, as oil industry workers incur expenses in rubles and their expenses allegedly did not grow.
As if in response to it in September because of the proceeding increase in prices for oil and weak ruble tax on mining rose approximately to 6.4 thousand rubles per ton. Prerequisites for a new round of price crisis were created. And it did not keep itself waiting long.

Autumn aggravation

At the beginning of October wholesale prices started increasing again. They reached in the moment 41.5 rubles for AI-95 liter. Certainly, average prices were lower, but this symptom extremely disturbed independent players. They even asked the government to allow them raising the prices at gas stations and at the same time started telling that oil refineries work not at full capacity.
The government discussed various versions of the solution of the arisen problem: from subsidizing of oil processing and increase in export duty before return at gas station of alcoholic products. And the prices at gas stations slowly crept meanwhile up.
In this regard it is worth reminding that fuel retail of our country endures the third stage of transformation today — the increasing role in the income of gas stations is played by the accompanying goods and services. So, Rosneft following the results of last year earned on only coffee about 4 billion rubles, and Gazprom Neft — 3 billion rubles. The accompanying goods do filling business more stable and less dependent on fluctuations of wholesale prices for fuel.
Independent players appeal again to increase offer through growth of exchange trade. But unexpectedly the leaders of the state became interested in their negative impact on the market.
Today there are about 26 thousand gas stations in Russia. Thereof 30% belong to vertically integrated companies and to independent players — 70%, but on realization volume 60-70% of motor fuel account for a share of vertically integrated companies.
The largest filling networks belong to Rosneft, Lukoil and Gazprom Neft. By number of gas stations Rosneft is in the lead — about 2.9 thousand. And Gazprom Neft possessing a network approximately in 1.26 thousand gas stations is in the lead on average daily realization – 20.1 tons. This indicator of Lukoil, according to the company, equals 12.8 tons per day and Rosneft – 10.8 tons per day.
Thus usually independent players the first raise the prices and shake the market at gas stations. Besides, certain representatives of independent players are ordinary exchange speculators who do not bring benefit and only inflate wholesale prices. An opportunity to discharge them of the auction was discussed at the top level.
Also it was clear that at preservation of high ruble prices of oil which reached 5.5 thousand rubles for barrel in the fall and growth of the excises planned for January, 2019 some part of independent players inevitably will raise the prices at gas stations. It will lead to a new jump in prices. Besides it could occur in December of 2018 — on a wave of excessive demand for fuel before increase of excises.
Nevertheless, in November the government and participants of the market managed to come to the agreement. The largest oil companies agreed to freeze gasoline prices and diesel fuel. In case of violation of obligations the government threatened to enter protecting duties. However it was clear that in crisis situation these duties will only undermine economy of the Russian oil processing.
The agreement was signed to the middle of March under conditions of the falling oil. At some point quotations fell lower than 50 dollars for barrel. But now the prices were stabilized around 60 dollars for barrel — 25 dollars lower than autumn maxima. That is the ruble prices are at rather convenient for branch levels.


At the beginning of current year some editions tried to create agiotage round the rising of price on gasoline, but it looked strange. As important news was given the information that the rise in price at the exchange which was on 12 thousand rubles per ton lower than May peaks.
Nevertheless, gasoline prices slightly grew. But it was within the reached agreement — in connection with growth of VAT. After that increases the situation in the market remains stable,
In 2019 a new round of tax maneuver started. It bears a number of risks for stability of refueling business. Special mechanisms were developed to avoid these risks. But if they do not work, according to Dmitry Kozak, new mechanisms will be developed.
Within a new stage of tax maneuver it is supposed to reduce smoothly export duty till 2024 — from 30% to 0%. And here the rate of a tax on mining on the contrary will rise up till 2021.
This paradigm creates obvious danger to processing in Russia. Oil becomes more expensive to the Russian consumer. It appears in the same conditions, as external buyers. By the existing estimates, without special measures the margin from processing can decrease more than in 2.5 times. Here danger and to economy in general is covered: take out crude oil for export can be more favorable than to send it for processing within the country.
Fortunately, new tax rules provide the return excises. That is return of excises from the volumes of oil going for processing — about 3 thousand rubles per ton. At their charge the geographical position of plants will be considered — in the most advantageous position there will be Khakassia and Krasnoyarsk Territory. And also the level of modernization of the enterprise will be considered. That is it will be favorable to operate qualitative oil refineries. This mechanism in the light of that from 2019 to 2027 is planned to put into operation 45 installations of secondary oil refining at the Russian oil refineries is especially important.
Also the damping extra charge being in fact compensation for the half-received revenue will be used. It will make domestic market more attractive to the oil companies than external even if nominally deliveries to a foreign market would be more favorable. The size of conditional gasoline price and diesel fuel became the main stumbling block at discussion of this measure.
Since 2019 the government acquires the right to impose export duties on oil products in size 60%. It can be made if the price in the world markets of oil raw materials (Mediterranean and Rotterdam) during monitoring grows on 15%.
Also possible problems with quality of fuel because of dishonesty of participants of the market were considered. In the first half of current year in the territory of the Northwest federal district the system of monitoring of quality of fuel will be introduced in the pilot mode. The system will show, at what stage — from oil refinery to a gasoline tank — quality spoils. Participation in «the pilot» will be voluntary.
Some kind of guarantee of safety for domestic market is also gradual input of new tax norms. Especially — export duty. Smoothness of influence guarantees that the government really will be able to introduce amendments in mechanisms of tax maneuver if necessary. And business will manage to adapt for new conditions, sating domestic market in a due measure. Restoration of prices of oil, optimum for the world market, and together with them growth of the ruble prices will be the main test for the system which developed in 2019. At the moment the system looks rather balanced that the Russian market avoided new price crisis.