PBK daily: "The myth of 15 rouble petrol"
Putin explained why there will not be any cut-price petrol in the country.
Prime Minister Vladimir Putin admitted that an overreliance on manual price regulation of the oil market would lead to a shortage of fuel in the country. Therefore, he said people should not expect the oil producers to cut their prices. If the price of petrol fell to 15 roubles a litre the companies would simply stop producing it.
Prime Minister Vladimir Putin believes that a sharp fall in petrol prices at home would force companies to sell their oil products abroad. That was how at a meeting with political scientists in Novo-Ogaryovo yesterday he commented on the proposal by Sergei Mironov, leader of the A Just Russia party, who promised that if he won the presidential election he would cut the price of AI-95 petrol and diesel to 15 roubles a litre. "We can cut prices but it would lead to fuel shortages. We would have enough to last literally two or three days. Companies would simply stop making the product, they would make other products from the oil and sell them abroad," the prime minister said, RosBusinessConsulting (RBC) reported.
The government has some experience of regulating fuel prices. Admittedly not a very positive experience. Exactly one year ago Vladimir Putin sharply criticised the oil companies for, in his opinion, inflating fuel prices. By that evening the companies had lowered the price of fuel at their petrol stations. However, by spring there was a shortage of fuel in the country, brought about by the increase in the price of crude oil, new technical regulations which the companies were having difficulty complying with, as well as repair works at several oil facilities. The price of fuel started rising sharply. As a result, the price of petrol last year increased by 13.8%, with the rate of inflation at 6.1% (according to Rosstat, the Federal State Statistics Service).
The government, in turn, decided to set up a fuel reserve with the help of the oil producers. In May it introduced protectionist duties on fuel exports, extended the validity of the technical regulations which allowed sales of Euro-2 fuel, and accepted a written undertaking from the oil companies to upgrade their refineries by 2015.
Price freezing also started this year: the price of fuel will remain at December levels until the elections are over (see table). Experts are warning that this decision could lead to another price rise. Vladimir Putin also understands the economics of the fuel market, which is why he is not making any promises about cheaper fuel.
A scenario where fuel costs 15 roubles a litre is not possible given the current price of oil and the level of taxes, says an analyst from URALSIB Capital, Alexei Kokin. Even if oil prices fall to, let's say, 60 dollars a barrel, the price on petrol won't drop that quickly. In addition, no one now believes in cheap oil, and if there are low prices on raw materials the oil producers will postpone their plans for modernising their refineries and reduce fuel output, the experts thinks.
By Galina Starinskaya
