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Oil becomes cheaper – more expensive gasoline.
Purpose driven gasoline.
Be like gasoline.
Jokes, jokes, and the story around gasoline is really extremely interesting. And not only from a purely practical point of view – how much and when it will rise again, but also as a reflection of what is actually happening in Russia and the Russian economy.
It is better to unwind this tangle from the end – from 2018, in which the price of gasoline added 11% at once. Of course, gasoline became more expensive before that (in 2014, the 92nd cost 29.45 and now it is 42.45), but never so sharply and for no apparent reason.
Of course, the government has attended to the price of gasoline. Not because it cares about the population very much, of course, but because, first, the protests about the pension reform have not yet died down (in 9 months 2154 protest actions took place in Russia, of which 46.5% were about retirement age), and, secondly, such a sharp increase does not correspond to the officially declared inflation rate of 4% – slaves may be suspicious and outraged.
That gasoline prices are already being artificially restrained is evident from what is happening with small wholesale buyers: discounts on freight cards of freight carriers are canceled, and wholesale prices in some cases turn out to be higher than retail prices.
In addition, from next year the VAT will increase by 2%, which will automatically lead to a price increase of at least this amount. In addition, it was planned to raise the excise tax on gasoline, but it is now in question.
In general, the government went to the oilmen and politely wondered what the matter was. Some media outlets wrote: “Deputy Prime Minister Dmitry Kozak threatened / gave instructions / delivered an ultimatum to the oilmen,” but you don’t believe in this nonsense, please.
Oil industry workers, including Rosneft, are a monster corporation with Sechin at the head. And, as we well know, everyone who tries to hurt his interests has good chances to be on the prison gang next to Ulyukayev. Therefore, there can be no ultimatum or speech, and all these loud statements are just a crappy comedy that is broken before us in order to hide what is really happening.
Oilmen, of course, in two accounts explained to the government what was happening. First, you, ladies and gentlemen of officials, snicker – in the price of gasoline only the mineral extraction tax, VAT and excise are 55%, and together with the rest of the taxes – under 65%. If you want cheap gasoline – moderate your appetites and reduce excise taxes. Try to spend less on security forces and for some reason do not try to make a budget surplus.
Secondly, you started playing geopolitics. For a long time, the exchange rate of the ruble to the dollar, as pegged, followed the quotation of a barrel of oil. Therefore, the cost of a barrel in rubles remained stable and fluctuated smoothly in the range from 3000 to 4000. Now, thanks to the sanctions, the ruble is untied from oil (that is, in fact, just collapsed relative to it) and the barrel costs from 5000 to 6000 rubles. And if earlier in the cost of a liter of gasoline oil was about 8 rubles, now – all 16 and right now a liter of 92go should cost about 50 rubles.
The government mumbled in response to something unintelligible, but the excise tax temporarily lowered by 3 rubles, which is clearly not enough to compensate for the increase in cost. 5 more needed to be taken somewhere. Of course, for philanthropic reasons, the oilmen, of course, did not agree to pay this delta from their own pockets.
The government immediately began to look at whose expense this could be turned, if the people did not want to pay more, and the oil workers — to get less. Searched and, oddly enough, found.
At the mercy of
The government decided to pay off the oil companies with independent gas station chains for a temporary (until March 2019) fuel price — in fact, put them in an impossible position and give large oil companies the opportunity to get fuel retail for nothing, 15 out of 25,000 gas stations in the country.
How it is done: since June 2018, the retail price of fuel at gas stations has been fixed, tied to the official inflation rate, and limiting the margin of independent gas stations from above. And just the other day the government banned traders from participating in the exchange trading in gasoline – they say it’s because of them, damned speculators, prices are rising.
I will not remind you how in the USSR they fought with speculators, and what came of it. It is still worse here: the trader's mark-up is mere pennies, incomparable with the fat piece of taxes that the government takes. But traders sell gas to independent gas stations in small lots and with a deferred payment. And if, until now, the gas station could (conditionally) take from the trader one fuel tanker a month, sell it and pay for it, then now she will have to go to a large refinery, which will say: take the railway tank and pay for it immediately, and even at an exorbitant price, because you, unlike the trader, are a small buyer.
It is clear that for many small networks this is death-like – those who cannot find alternative suppliers and working capital will be forced to shut down.
In general, in the next six months, a huge number of gas stations will change owners. Will it make us any better? No, of course. The market is monopolized and competitors are destroyed not in order to distribute gas to the population for nothing, but in order to earn money on it. Therefore, when the redistribution of gas stations is over, prices will go up again.
An even more interesting story related to the cost of gasoline, the so-called “tax maneuver”, will begin next year. Here, small refineries will fall under the distribution.
The essence of the tax maneuver is simple: now the government takes only duty on oil exported abroad, and wants to take with all the oil produced, which theoretically would increase revenues to the treasury more than doubled, because 53% of Russian oil is consumed in the domestic market.
Therefore, over the course of several years, the export duty will decrease, and the MET rate, which is similar to it in terms of formula and size, will increase.
So far, the export duty has helped keep the low cost of oil in the country. In essence, the domestic price of oil is equal to the Brent oil quotation minus $ 1.5-3 per barrel discount for the lower quality of our oil, minus the export duty (about 9 rubles per kg) minus transportation costs (about 1 ruble per kg). Accordingly, if now 1 kg of oil on the international market costs 26 rubles, then on the domestic market – about 16 (but the price range is very large).
If right now just to replace the export duty with mineral extraction tax, then oil in Russia will cost 25 rubles, and gasoline – 62 rubles. To prevent this from happening, the government plans to compensate this difference for gasoline producers for the domestic market with a negative excise tax.
The question is, why was it necessary to fence the whole garden, if in the end nothing changes? Will change. And the answer to this question lies somewhere in the field of Russian imperial ambitions and nostalgia for the USSR.
When the USSR collapsed, Russia in every possible way clung to its flying fragments, trying to bind them, if not politically, then at least economically. As a result of these attempts, the Customs Union of Russia, Belarus and Kazakhstan was born.
Among other things, this meant that Belarus could buy Russian oil without export duty, and then sell to the West and put the difference between the price in the domestic and foreign markets in its pocket. Of course, this caused displeasure on a regular basis in Russia and attempts to somehow tighten this faucet, returning income to its treasury.
In response, Father Lukashenko regularly made big eyes: “What about the union? We are brothers! ”And blackmailed Russia with an increase in transit tariffs.
In general, Russia had to choose: either to pay for the illusion of having allies, or to break this alliance. However, instead she decided to go the third way – to solve the problem of tariff unification with the help of a tax maneuver.
In fact, the idea was to return to Russia the income from the re-export of Russian oil, adjust the disproportion in the price of fuel with negative excise, and even adjust it in such a way as to stimulate the development of modern oil refineries in the country.
The idea to pick partners in the union is beautiful, no doubt. On paper. In practice, everything is somewhat more complicated. To begin with, the export duty itself was calculated relatively simply, according to three different formulas, depending on the average price of oil on the world market.
Given the price of oil from $ 182.5 per ton ($ 24.9 per barrel), the formula for calculating the export duty is as follows:
VC = $ 29.2 + 30% * (C – $ 182.5)
Where C – the average price of oil.
Taking into account the tax maneuver, the following formula appeared:
MET: 919 * Cc – [559 * Кц * (1 — Кв * Кд * Кдв * Кз * Ккан) — Кк — ЭП * Р * Ккорр * Свн]
Even without going into details it is clear that in addition to the export duty (EP) and the average exchange rate of the ruble (P), there are 9 more factors, some of which can be reset to zero when certain conditions are met.
Complicated? But that is not all. You have not forgotten about the excise tax, which should compensate for the increase in the mineral extraction tax? Here is his formula:
Ans = ((Tsneft * 7.3 – 182.5) * 0.3 + 29.2) * P * I Sleep * Corc
In essence, this is an export duty inside out. R – the average exchange rate of the ruble, Corrc synchronizes the simultaneous growth of the mineral extraction tax and the reduction of the export duty, and Spyu is the most important factor, which, in fact, determines what the amount of compensation will be and whether it will be at all.
In the calculation of this coefficient, real hell begins. I counted at least 19 (!) Variables on which it depends.
Total: if you are a domestic producer of petroleum products, then in order to make management decisions you need to keep in mind three dozen factors, each of which the government can change whenever it wishes.
And this prohibitively complex system of fine-tuning should work in conditions of instability, total unprofessionalism and corruption? Seriously?!
As soon as something changes in the market (regular sanctions, for example), the system will start to fever. As soon as the government needs more money and it tightens up a couple of coefficients, the system will start to fever. As soon as Sechin decides that he needs a bigger yacht, and lobbies for favorable adjustments to him, the system will start to fever.
Simply put, it will always be in a fever, the whole industry will suffer from this and, first of all, small manufacturers who will not be able to kick the vice-premier’s door and shout: “What have you, brute, done again ?! Get everything back to hell! ”
In Russia, only 32 large refineries owned by 16 companies. And in order to regulate their excise taxes, you need 30 factors? What for?!
For good, you need to extremely simplify the formula for calculating the mineral extraction tax, abandon the stupid idea with negative excise taxes and allow the price of gas to come to the European level. According to official data, the share of gasoline in the consumer basket is less than 5% and the increase in its cost could be compensated for the population by lowering VAT or personal income tax.
Yes, it would have hurt someone more, but there is at least some justice in this – those who use it should pay for gasoline. In addition, expensive gasoline will stimulate the use of public transport and the introduction of electric vehicles, which is useful for the environment and to combat traffic jams.
However, simple solutions are for smart people. We will continue to pile on each other dozens of coefficients, and when they fail, to roughly intervene in market mechanisms, without really understanding how they work, and only exacerbate this situation.
As a result of the tax maneuver, players of Rosneft scale will receive super profits, and the rest will be only problems. The rise in gasoline prices with such a complex system cannot be fully compensated, even if the government really wants it, so there may well be a shortage of gasoline on the market with all the ensuing consequences.
The investment prospects of the industry in terms of unpredictable taxation and permanent sanctions are also rather vague. What is the point of investing in the construction or modernization of refineries, if the tax environment is so unstable?
The only thing that is already clear is that all this tax phantasmagoria is not capable of stopping the rise in gasoline prices, gives rise to instability, threatens with a potential shortage of gasoline, hampers investments and stimulates corruption.
P.S. If you have loyalty cards of gas station networks and they have accumulated bonuses – spend them before they are reset.
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