All profits will go to speculators – international commodity traders
Gas prices in Europe, which has been in the grip of the most severe fuel shortage for more than a month, have set another historical record, overstepping the bar of $ 1000 per thousand cubic meters. Following them, oil quotes soared, dropping a barrel for $ 80. Alas, income from price surges is unlikely to become a stimulus for the economic growth of our country. The value of Gazprom’s export volumes is limited by long-term contracts, and additional oil revenues are limited by the “budget rule”.
“Thousand for a thousand” – this is the arithmetic formula that currently operates on the European fuel market. The cost of one thousand cubic meters of natural gas, which cost only $ 300 at the beginning of the year, has now exceeded “a piece of bucks.”
The fuel reserves of the Old World continue to be at a critical level, despite the increase in supplies from Russia and Norway, which provide up to 60% of the energy balance of the EU countries. Moreover, the price ceiling may turn out to be much higher than the current record level. International financial conglomerate Citigroup has doubled its forecast for quotations of “blue fuel” in Asia and Europe for the last quarter of 2021.
In the event of a cold winter and hurricanes in the Gulf of Mexico, the main production region of the United States, even larger surges can be expected – up to $ 3,500 per 1,000 cubic meters, which will be the equivalent of the cost of a barrel of oil at $ 580.
High hydrocarbon quotes instill confidence in Russia’s successful overcoming of the negative economic consequences caused by the coronavirus pandemic. The fall in world energy prices usually serves as an excuse for domestic officials in charge of the country’s economic situation for the national budget deficit, which continues to largely depend on oil and gas exports. Last year’s coronavirus pandemic, accompanied by a collapse in prices of “black gold”, caused the maximum financial failure in 10 years: the treasury lost more than 4 trillion rubles, which was 3.8% of Russia’s GDP.
The budget holes had to be closed due to urgent anti-crisis measures, during which the Ministry of Finance borrowed more than 5 trillion rubles in the domestic market, mainly by borrowing these funds from state banks, and also devastating the National Welfare Fund by 300 billion rubles.
It is reasonable to believe that with the current high cost of raw materials, the situation will turn out to be diametrically opposite: the budget will be in surplus, and additional funds raised from the export of energy resources will be invested in the development of the domestic economic economy. However, it is far from certain whether our country and, first of all, the Russian population will feel the positive effect of the commodity price boom.
“Gazprom forms prices for long-term contracts based on the dynamics of oil prices, the growth rates of which are still lagging behind gas prices,” explains Artem Deev, head of the analytical department at AMarkets. “The average cost of one thousand cubic meters of Russian” blue fuel “for the EU does not exceed $ 270, which is almost four times lower than the current prices on European exchanges, so there is no need to talk about the benefits for Russian suppliers from the price rally for energy resources.”
The main beneficiaries of the rapid rise in the cost of energy resources are international commodity traders, who occupied the European energy market a couple of decades ago. In the hands of such firms are not physical volumes of hydrocarbons, but futures – contracts for short-term or medium-term supply of oil and gas. They trade on the spot (derivatives market). Prices in spot contracts often differ significantly from exchange quotes, however, it is almost impossible for manufacturers to argue with traders who have long dictated their trading rules on the international market – resellers will always find convincing arguments in favor of discounts when buying fuel and increasing margins in transactions with the end buyer.
In fairness, it should be noted that our country will still receive profits from the export of oil and gas. The super profits from commodity exports, which are sent to the NWF, already give hope for attracting an additional 2.5 trillion rubles. “The state’s super-profit from gas supplies to Europe may exceed 1 trillion rubles. Most of these funds will be received as a duty on the export price of “blue fuel”, as well as in the form of mineral extraction tax and dividend payments, ”said Lev Kravets, chief analyst at Esperio.
In turn, the cosmic prices for exported natural resources are unlikely to add an extra penny to the pockets of ordinary Russians. “The officials, as before, will prefer to reserve the excess profits from the supply of energy resources abroad for even more difficult times,” says Igor Nikolaev, Doctor of Economics. – Already guaranteed social benefits, in particular, pensions, will be indexed at the previously announced level.
However, it is not worth counting on additional social benefits from the state to unprotected segments of the population – the elections have passed, the results that suit the authorities have been obtained, and there is no need for them to shell out further beyond the measure ”.