How Real is the Scenario of Increasing Gasoline Accessibility in Russia

Abstract

 In recent years, a system of conflicting requirements has formed in the Russian motor fuel market, which resulted in a sharp increase of prices in 2018. As a result, a reverse excise tax and wholesale limit price tool was introduced, which changed the pricing system. Oil companies continue using the netback price as a reference, but deduct the reverse excise tax and some discount for the domestic market from it, thus determining the wholesale price. In 2015–2019 gasoline availability in Russia decreased by 12% and fell below the 2009 level. In the baseline scenario, consistent with the current forecast of the Ministry of Economic Development of Russia, the availability of gasoline will increase due to growth of real incomes of population, but will remain below the 2015 level. At the same time, the scenario of increasing gasoline availability by slowing down the price of motor fuels is rational. This allows redistributing part of revenues of the state budget and the oil sector (which would probably be reserved) in favor of population and non-energy sectors of economy, that is, exactly where a qualitative improvement is needed.