Gasoline is more expensive in Russia than in the United States. What is the reason?

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

According to the finance ministry, it is unfair that domestic corporations receive less money from Russians than from foreigners.

Russia was able to overtake America. This time - at gasoline prices. In the first quarter, an American gallon (3.785 liters) cost an average of $ 2.57 in the United States, and $ 2.58 in Russia, which is equivalent to 145.6 rubles. Gasoline prices in the Russian Federation have been growing in recent years, despite the drop in oil prices on world markets. And apparently, in the foreseeable future we will have to compare the cost of fuel not with the United States, but with Europe, where gasoline is 2-3 times more expensive.

Head to head

The relative cheapness of gasoline has always been considered one of the advantages of the domestic economic system. To be convinced of this, it was enough to visit a gas station in one of the neighboring European countries. The difference when converting from currency to currency gave a twofold and sometimes threefold savings. Very clear.

But the difference with the price of gasoline in a country where oil has always been produced in large volumes - the United States - was not so noticeable. In the past 10 years, fuel (AI-95) in America has been somewhat more expensive than in Russia, but that's all. For example, in August 2008, a month before the acute phase of the global financial crisis (and the collapse of oil prices), its price in Russia was about $ 1.1. In the US, the average cost was as high as $ 1.2, but that was the peak.

Subsequently, the prices expressed in dollars in Russia and the USA varied approximately simultaneously. As soon as the price of gasoline fell in America, in Russia the ruble weakened against the dollar. Tellingly, both were caused by one reason - the decline in oil prices. During these periods, gasoline rose in price more slowly than other goods, and subjectively it seemed that it was becoming more affordable.

Nevertheless, almost the entire last 10-year stretch of gasoline in Russia was still cheaper than overseas. And now, according to Bloomberg, a liter of AI-95 in the US now costs $ 0, 678, while in the Russian Federation - $ 0, 681. What may surprise many Russians: why is the USA, which still imports almost a quarter of the fuel consumed in the country, is gasoline cheaper than the second exporter in the world? And why is fuel not getting cheaper in Russia along with oil?

Pay the excise tax and sleep well

Now, although Russia has given way to the United States in the ranking of the cheapest gasoline, it is still quite high there - in 11th place. Ahead, in addition to the United States, are only highly specialized oil-producing countries like Saudi Arabia, as well as Venezuela, where petrol is cheap, but it is not - thanks to the policies of Nicolas Maduro. Malaysia is one of the few countries with a mixed (industrial and raw materials, not raw raw materials) economy that offers consumers cheaper gasoline.

This state of Southeast Asia has a fairly flexible taxation system that protects consumers and manufacturers from strong price fluctuations. The Automated Pricing Mechanism (APM), established back in 1972, is to raise gasoline excise taxes in the event of a fall in oil prices and to introduce subsidies for consumers when oil becomes too expensive. The situation is somewhat simplified by the fact that oil and gas in the country is controlled by one state-owned company (Petronas), accountable to taxpayers.

But in Russia, the relationship between the price of oil and the price of gasoline is not at all obvious. The country largely lives on the export of oil products, with its help the budget is replenished. According to Mikhail Krutikhin, partner of the RusEnergy consulting agency, taxes account for 60 percent of the cost of gasoline. In the United States, by comparison, it is 22 percent. In America, with its cult of the automobile and a low share of the state in the economy, cheap gasoline is politically more profitable than filling the budget.

As Krutikhin noted, a similar situation is observed in many oil-producing countries of the world. “In Norway, gasoline is more expensive than in neighboring EU countries. Norwegian motorists regularly go to neighboring Sweden to refuel,”he gave an example.

According to Andrey Polishchuk, an analyst at Raiffeisenbank for the oil and gas industry, it makes no sense to calculate gasoline prices in Russia in dollars, since oil companies bear their costs mainly in rubles and independent refineries buy raw materials again for rubles. “In the long term, a lot depends on excise taxes. Excise taxes are raised, and the price of gasoline is also growing. Take 2011, for example. Then the excise tax was more than 5 thousand rubles per ton, and now it is more than 10 thousand. This is the answer to the question why gasoline is getting more expensive,”he said.

As in the best houses in Europe

Experts believe that gasoline will continue to rise in price, and faster than inflation. According to Krutikhin, for the sake of filling the budget, the government "is ready to tear seven skins from consumers." According to Polishchuk, Russia will almost certainly come to the European level of gasoline prices, that is, from one and a half to two dollars per liter.

The most interesting thing is that the Ministry of Finance can act as one of the initiators of this. Back in October last year, they said that it would be nice to completely abolish the export duty. What does this mean? Prices in Europe, where most of the Russian oil is supplied, are significantly higher than in Russia. It is beneficial for companies, including state ones. Without the export duty, they will send much more to export and much less to the domestic market.

Of course, this means a drop in budget revenues. Therefore, to compensate, it is proposed to increase the tax on the extraction of minerals, which will increase the costs of companies and force them to further raise prices. The Ministry of Finance speaks directly about "the need to equalize price conditions in the domestic and foreign fuel markets." According to the ministry, it is unfair that domestic corporations receive less money from Russians than from foreigners. There are also secondary reasons - in particular, constant disputes with Belarus over the return of duties for the re-export of oil products produced from Russian oil. But the main thing is the desire to equalize prices. The Ministry of Energy, by the way, proposes not to rush and abolish the export duty only by 2025.

“Export duties on oil will gradually decrease. Of course, this will not happen in the next 2-3 years. We need to watch what happens to the second tax maneuver in 2022. But in the end, we are striving for European gasoline prices minus transportation costs,”concluded Polishchuk.