Even though there is a significant reduction in global oil prices in rubles, the calculated domestic price of oil may increase leading to a rise in the fuel cost in the country

19 january 2015 | Rossiyskaya Gazeta

It is expected that in 2015, the petrol price will rise by 10%, despite the decline in oil prices. This forecast was confirmed by the Deputy Prime Minister Arkady Dvorkovich. However, not all experts agree that price increase will be limited to 10%.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

The Head of the Department for Strategic Studies in Energy of the Analytical Center Alexander Kurdin explained to "Rossiyskaya Gazeta" that only 40% of the petrol cost is governed by the oil price. Now in the price of AI-92 the production's part accounts for by 10%, the profit of manufacturers - about 5%, and almost 15% " are eaten" by the trade markup. After all, by the former tax structure approximately 30% was spent on VAT and excise duties. Consequently, once oil in the past six months has declined in value by 2 times, petrol should go down in value by 20%.

However, everything is much more complicated, according to Mr. Kurdin. "Market mechanisms are such that the domestic oil price in Russia should be approximately equal to the world one excluding export duties. And the world one should be balanced with international oil prices. However due to sharp fluctuations in oil prices which happened recently the situation is more complicated: the duty is not corrected immediately, but with a lag. Besides, when oil bumps the ruble exchange rate loses stability", considers the expert.

Until the end of 2014 the ruble exchange rate and the oil price were more or less even in "antiphase" and the world oil price in rubles remained stable - 3600 rubles p/b in January and in November 2014. The export duty rate kept up as well. In December the world oil price in rubles fell by 4.3%, and the "laggy" duty, by contrast, increased slightly if we count in rubles, according to Mr. Kurdin. "Accordingly, the domestic oil price was to reduce and at that time the petrol price cost reduction happened", reminded the expert.

However in early 2015 the situation has changed: a "tax maneuver" came into force, which somehow moves previous calculations. The export duty rate decreased from 59% to 42%, respectively its specific amount decreased as well – by one-third compared to December. Therefore, despite the significant decrease in global oil prices in rubles, the estimated domestic oil price is expected to increase, leading to a rise in the cost of fuel in the country, noted Mr. Kurdin. At the same time the petrol excise duty is reducing – for Euro-5 by less than 5%, the Euro-4 – by more than 20%, and this is in favor of lower prices.

As a result in general petrol prices are stable (with the beginning of the year are growing by only 0.2-0.3%), which seem to be just the only stable thing  among whirlpools of oil prices, exchange rates, and even tax rates.  Truth to be told the reason for that may be in undesirability of companies to drastically alter prices rather than in the mutual influence of all factors.