The Russian authorities will consider the possibility of adjusting the fuel damper for gasoline and diesel fuel in 2022. This order was given by Deputy Prime Minister Alexander Novak following a strategic session on the situation on the oil product market, the press service of the government reports.
“In terms of motor fuels, it was decided to continue monitoring the situation on the fuel market, including its exchange link, to consider the feasibility of further increasing the exchange rates for gasoline and diesel fuel by 1% for each of their types,” the message says.
A damping mechanism in the oil industry was introduced in Russia in 2019 to contain prices in the domestic fuel market. It assumes a reverse excise tax for fuel producers. If gasoline and diesel fuel are more expensive abroad than on the domestic market, the state compensates refineries for part of this difference in order to stimulate them not to raise prices in Russia. Otherwise, oil companies transfer part of their excess profits to the budget.
In the spring of 2021, this mechanism was adjusted: the base price for the domestic market, prescribed in the damper, decreased from 56.3 to 53.6 thousand rubles. per ton. In addition, from 2022, the annual price indexation incorporated into the damper mechanism for diesel fuel will decrease from 5% to 3%. Meanwhile, the wholesale price of gasoline and diesel, laid down by the government in the damper formula, grew by 27-30% faster than the retail price this year, which caused the profitability of the filling station to fall. The Russian Fuel Union had previously warned the government that if this mechanism was not corrected, then next year many gas stations could go bankrupt.
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