Regulation May Lead to a Fuel Shortage

10 august 2018 | Moscow 24

The draft law on state regulation of gasoline prices was submitted to the State Duma. Its authors propose to set the price limit for fuel from 2019. They believe this will protect consumers from strong price fluctuations in the market.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

Alexander Kudrin, the Head for Research of the Department for Fuel and Energy Sector of the Analytical Center, informed the Moscow 24 portal that the draft law did not seem promising, as the price regulation quite often turns out not to be completely correct: regulators cannot quickly respond to changing market conditions.

"Regulation can lead to the fact that prices will not be able to adapt in time to objective market changes, and as a result, fuel deficit may occur if it turns out that the regulated price is not attractive enough or is not economically justified for producers," Mr. Kurdin said.
According to the expert, it is necessary to track prices with the help of an antimonopoly regulator. He says that the Federal Antimonopoly Service is being actively involved in this process. It assesses the economic validity of the prices set by companies that exert a serious impact on the market and dominate it.

"It seems to me that the existing antimonopoly control instruments are quite sufficient to provide an economically justified price, without resorting to top-down regulation," Mr. Kurdin summed up.

Source: Moscow 24

Photo: from open sources