Russian drivers demand lower gasoline prices, gasoline still in deficit

Skyrocketing gasoline prices in Russia, the world’s largest oil producer, have pushed angry drivers to streets in 18 Russian cities to demand that the authorities lower gasoline prices by 30 percent. The Russian union of drivers staged a national protest action on Thursday over the gasoline situation in the country. With growing gasoline prices, many of the Russian regions are facing fuel shortages and the authorities are unable to solve the problem.

A rally was held in downtown Moscow, on Bolotnaya Square. Protesters demanded lower gasoline prices. On the same day, drivers of long-distance trucks drove their vehicles along one of Moscow’s busiest roads, the Leningradskoye highway. The action was not authorized and trucks were convoyed by traffic police vehicles. Angry drivers threaten to frustrate parliament elections if their demands are not met.

Russia’s oil companies are deriving twice as much in profits as their colleagues abroad, Alexander Kotov, the driver union leader, told a rally in Moscow.

The leader of the Just Russia party, Sergei Mironov, demanded that the country’s Criminal Code be supplemented with an article providing a punishment for “colluding with the aim to raise prices for fuels and lubricants.”

The protesters put forth a draft resolution calling for “an indefinite protest campaign against exorbitant gasoline prices.”

“Under the guise of big words about the need to modernize the country’s oil industry mouthed off in the recent months, the government actually colluded with oil major companies to keep fuel prices as high as they are,” the resolution reads.

Protesters warned of more rallies and actions in the government fails to list actual measures to reduce gasoline prices by September 22.

Andrei Konoval, the coordinator of the national protest action, said the key reason behind growing gasoline prices is rooted in the lack of “political will.”

The resolution had political threats as well. “If the authorities take no steps to satisfy our demands, we will do our utmost to bring it home to the millions of car drivers across Russia whom they should not vote for,” the resolution says.

Similar actions were held in other Russian cities, including St. Petersburg, Izhevsk, Arkhangelsk, Ivanovo, Kostroma, Tver, Stavropol, Irkutsk, Kurgan, Kirov, Krasnoyarsk, etc.

This spring, a number of Russian regions faced gasoline shortages and subsequent price hikes. Russian Prime Minister Vladimir Putin said then that the problem stemmed from a collusive agreement between oil companies. He has given the government dressing-downs more than once but things seem to be still where they started, the Kommersant daily writes.

The Russian ministry of fuel explained the then gasoline crisis by increased oil exports (by 67 percent) that followed oil price rise on the global markets. The government ultimately raised gasoline export duties by 44 percent to a rate of 408.3 U.S. dollars per ton, from May 1, 2011.

Russian Minister of Energy Sergei Shmatko said last week that Russia had no fuel deficit and promised to consider cancellation of protective duties on gasoline exports only in case fuel reserves at oil refineries exceed 1.200 million tons.

In the mean time, fuel deficit has spread onto Moscow as well. In the middle of the week some of Moscow-based fuel filling stations stopped selling gasoline of popular grades AI-95 and AI-98. Until now, Moscow has been lucky enough to avoid gasoline shortages the rest of Russia has been facing since spring.

Oil majors however blame the problems with gasoline supplies on poor logistics and feverish demand, although they do admit such problems. Independent suppliers, in their turn, pass the buck on oil majors, the RBC daily writes.

As a countermeasure, the Federal Antimonopoly Service has suggested that excise duties should be monthly adjusted against the inflation level multiplied by a factor of 0.9.

According to the service, domestic oil prices are pushed up by growing mineral extraction taxes and export duties after a surge in oil prices. It said the situation could be soothed by regulation of excise duties.

Meanwhile, the service’s deputy head, Anatoly Golomolzin, has pledged the country would avoid another wave of the fuel crisis like the one that hit Russian car drivers this spring. “No gasoline shortages are expected in Russia. There is enough gasoline to be used all through the autumn, and in the entire foreseeable perspective as well,” the portal cites him as saying at a recent news conference in Moscow.

However he sounded not that optimistic about gasoline prices. In his words, gasoline prices will continue their upward movement. But, he said, this is a natural process and it will not entail price spikes. “The whole set of mechanisms give us grounds to hope that the prices could be kept within the inflation rate,” he was quoted as saying.

He also dwelt on numerous violations of anti-monopoly laws by oil companies. According to Golomolzin, “a total of 72 cases were opened on charges on violations of anti-monopoly laws from late December, 2010 through the first six months of 2011.” “Such violations included the abuse of dominant market positions, and cartel agreements in a number of cases,” he said.

Notice should be made that just before the news conference one of Russia’s oil majors, LUKOil, turned itself up to the Federal Antimonopoly Service. The company acknowledged that it had fixed monopoly prices at its fuel filling stations. Meanwhile, oil majors promise to remedy the situation on their own, without a hand from the anti-monopoly authorities. It is quite likely that they will have to pay another portion of penalties. But such sanctions, experts believe, are no threat to the oil giants which keep deriving excess profits.

MOSCOW, August 5

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