Gasoline and Diesel Fuel Prices May Fall if the Ruble Strengthens

24 may 2018 | Rossiyskaya Gazeta

The government is looking for ways to stop the growth of gasoline and diesel fuel prices, writes the Rossiyskaya Gazeta. The reduction of the excise on automotive gasoline and diesel fuel planned for the 2nd half of the year will most likely slow down the rate at which the prices are rising at the pump but the newspaper does not believe that it would cause them to fall. And while the decision has not been taken yet, efforts are underway to keep the growth in check in the wholesale market, i.e. in the commodity exchanges seeing that whenever the price goes up there it inevitably causes the price at the pump to go up too.

Oleg Kolobov
Oleg Kolobov
Department for Fuel and Energy Sector

A lower excise will help in slowing down the growth of fuel prices and will reduce the pressure that the oil companies are currently being subjected to because that will bring down the export price to the level of the domestic prices, however, this measure will only partially compensate the low profitability of domestic fuel sales, believes Analytical Center expert Oleg Kolobov. "Given this situation, the domestic automotive gasoline and diesel fuel prices can only get cheaper if the international prices fall and/or the ruble strengthens," he told an RG correspondent.

The planned reduction of the excise for automotive gasoline by 3 thousand rubles and for diesel fuel by 2 thousand rubles should result in a corresponding reduction in the net-back prices for these items and consequently will make exports more attractive. This will definitely contribute to keeping wholesale prices from growing and that will result into more stable fuel prices at the pump in Russia. We can't really talk about a possible reduction in wholesale and retail prices, even though the planned reduction in the fuel excise in July is greater than the January increase in the excise in absolute terms (in January the excise on gasoline went up by 1.1 thousand rubles per tonne and on diesel fuel by 0.9 thousand rubles per tonne), the expert explained.

Source: Rossiyskaya Gazeta

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