OREANDA-NEWS. August 08, 2013. Deputy Head of the Federal Antimonopoly Service (FAS Russia) Anatoly Golomolzin addressed the Round Table “Motor Fuel in Russia: Expert Forecasts”.

Other participants included First Deputy of the General Director, the Institute of Natural Monopolies Research (IPEM), Boris Nigmatulin; the Head of the Directorate for Strategic Research of Electric Power Industry, the Analytical Centre at the Government of the Russian Federation, Alexander Kudrin; and the Head of the Laboratory for Forecasting in Fuel-and-Energy Complex, the Institute of Forecasing on the National Economy, Russian Academy of Science, Valery Semikashev.

The subject of the Round Table was increased prices for motor gasoline and diesel fuel in 50 constituent territories of the Russian Federation. Participants discussed dependence of price fluctuations on import-export operations, the connection between prices for fuel-and-lubrication materials and oil price quotations, and an impact of the seasonal factor.

Anatoly Golomolzin pointed out that in the past 6 - 7 years the situation on the market of oil products had remained stable. “Prices are changing at the rate close to the inflation rate. In this sense the situation on the fuel market is stable and encourages sustainable growth of the economy. Price is determined by the demand-supply balance and depends on a significant number of indicators: the overall level of inflation and taxation in the country, the level of global price indices, the seasonal factor and many others. There was a certain period when prices were growing under the pressure of monopolistic actions exercised by some companies. FAS investigated the antimonopoly cases and the oil companies had to pay over 20 billion Rubles to the federal budget. The most important was not the fines but the order to ensure fair pricing conditions. In particular, it means developing exchange trading, and establishing transparent indices for off-exchange transactions. Now such infrastructure is created: for already the third year around 10% of all supplies to the domestic market are traded through exchange”, said Mr. Golomolzin.

“Retail prices are changing smoother than small wholesale prices, which, in their turn, are smoother than wholesale prices. Therefore, it is more correct to compare monthly rather than daily data on the prices for wholesale transactions (including off-exchange ones) and retail prices. Looking at the index published by the Exchange, for instance, July average monthly price for the most sought-after Аi-92 gasoline increased for slightly more than 1500 Rubles. However, in March – June 2013 prices decreased considerably more. FAS has asked the oil companies to explain the reasons for the July growth”, explained Mr. Golomolzin.

“Sales of Аi-92 gasoline in July 2013 increased by 24% in comparison with June 2013, and by 57% in comparison with the beginning of the year. The Exchange also registers off-exchange contracts: in 2012 it registered off-exchange contracts for more than 41.3 million tons of oil products, in the first six months of 2013 – for over 23 million tons. Thus, we have a clear indicator for exchange as well as off-exchange trading”, stated Deputy Head of FAS.

“Consumers practically do not notice when prices decrease but overreact to any price increase. Using this phenomenon, some try to heat up the situation artificially. Since the beginning of the year, small wholesale prices changed the trends from downward to upward, and as a result in July prices changed insignificantly in comparison with January 2013. Similarly, retail prices were increasing in January – February and decreasing in March – June. As a result, prices increased by 1.2% with the inflation rate 3.5 %, so retail fuel prices were considerably below the inflation rates. Therefore, we do not expect any significant changes that can lead to a considerable price growth”, emphasized Mr. Golomolzin.

Then Anatoly Golomolzin discussed how fuel supplies from other countries, in particular, Belarus, affect prices. “In 2013 Belarus supplied 630,000 tons of oil products to the domestic market of the Russian Federation. Our Belorussian colleagues have certain obligations with regard to the supplies. For the first five months the supplies were mainly through the Exchange, and for the past couple of months – mainly in the off-exchange segment. Today we are negotiating with the Ministry of Energy that it is better to organize supplies through the Exchange to make fuel more available for a wider range of circle. In our opinion it should have a healthful effect upon the situation in general”.

“It is also important that the joint Order of FAS and the Ministry of Energy came into force which obligates oil companies to supply no less than 10% of fuel supplies (gasoline, diesel fuel, kerosene and residual oil) to the domestic market. The analysis carried out by FAS together with the Exchange showed that these provisions of the Order are already being executed and the required fuel is supplied on a timely and regular basis to the domestic market through the Exchange”, summed up Anatoly Golomolzin.