Report: Russia to Freeze Gasoline Prices

The Associated Press ^ | Sep 19 1:43 PM US/Eastern | The AP

[.cnI redruM]

Russia's major oil producers agreed Monday to freeze their gasoline prices in the country until the end of the year, the Interfax news agency said, citing the Industry and Energy Ministry.

The oil companies made the decision at a meeting with Industry and Energy Minister Viktor Khristenko, Interfax quoted ministry spokesman Stas Naumov as saying. The ministry could not immediately be contacted Monday.

"The result of the meeting was a voluntary decision by the management of Russia's largest companies; prices won't rise any further on the domestic market until the end of the year," the official said, according to Interfax.

Surging oil prices worldwide have boosted the cost of gasoline in Russia, the world's second-largest oil exporter after Saudi Arabia, provoking criticism from Kremlin-loyal politicians. Gas prices rose by a ruble in the space of a week as of Tuesday, to 18 rubles ($0.63) per liter (0.26 gallon).

The biggest Russian crude oil producer, Lukoil, announced a unilateral cap on gasoline prices Monday with immediate effect. Another major oil company, TNK-BP, which is a 50-percent joint venture with British oil giant BP, declined to confirm the price freeze, but said it would make an announcement Tuesday.

"We support the government's efforts to ease up tensions on the fuel market," TNK-BP spokeswoman Marina Dracheva told The Associated Press.

In a statement, Lukoil blamed high mineral-resource taxes that are pegged to world prices, as well as under-investment in domestic refineries.

[monday]

"There is no reason for consumption going up when prices stay frozen."

If gasoline is cheaper in Russia than it is in nations surrounding Russia, it will be only a matter of hours before people begin buying gasoline in Russia and reselling it elsewhere. Of course demand will go up in Russia.

Artificial pricing has never worked. It always causes unintended consequences. You would think that with Russia's extensive history with price controls and the subsequent shortages and misery that caused, they would know better than anyone what happens when artificial prices are imposed. Those who do not learn from history are doomed to repeat it.

[Mo1]

This is a huge bad idea

And what are they going to do at the end of the year when they have sticker shock when the prices go back to normal??

[Tailgunner Joe]

What is "Economic Communism"? According to jb6, "Setting government mandated maximum prices on a market economy is" and "forbidding companies to export is" (just not when Russia does it.) - LINK

[jb6]

One can't conduct free trade with a communist regime. I'm sorry you feel differently.

And yet neocon policy has been just that, or where do you think all our industry has been heading? But according to you, wanting to keep our industry in America so that American can be strong and produce what it needs is traitorous.

[GarySpFc]

I'm against trade with China. Sorry I don't fit your neocon-jew bogeyman cookie cutter image, but go right on with your constant lies and slander anyway, union thug.

What hypocrisy! You're the neocon wanting the U.S. to start wars around the world to satisfy your keyboard commando mentality. Those who have served in the armed forces believe in carrying a big stick, but hate like hell to use it.

[monday]

"Your original post suggested that if Russia sets price controls, they will have shortages. This is a false premise if two conditions exist. 1. Surplus Domestic Production. 2. Export Controls."

The Russians do have surplus domestic production of OIL. They do not have surplus domestic production of GASOLINE. Since it is gasoline thats price has been frozen, there could be shortages in some areas. The article said that there is a shortage of investment in refineries.

What price freezes and export controls will do is dump a significant portion of Russian oil and gasoline exports onto the black market.

It will not restrict actual exports as Russian authorities are among the most corrupt in the world. It will become a vast money making opportunity for organized crime. In fact it may turn out to be so lucrative that it becomes permanent. That will indeed be sad for Russian consumers because that will lead to permanent shortages as it did for other consumer products during the Soviet years.

[Tailgunner Joe]

That's not even true. Neo-cons urged congress to vote against free trade with China. Here's the proof: The Appeasement Gamble - by Robert Kagan and William Kristol - "We oppose most-favored-nation status for China. Republicans especially should vote against giving China a free pass to repress its people, threaten its neighbors, modernize its military, and undermine vital American interests in East Asia."

CALL OFF THE ENGAGEMENT - by Robert Kagan and William Kristol - "Since last year's vote to approve MFN for China, Beijing has carried out the most systematic crackdown against dissidents and democracy activists since Tiananmen Square. Since last year's MFN vote, the Chinese have been caught stealing nuclear secrets. They have deployed missiles across the straits from Taiwan. They have sponsored violent anti-American protests. Those who stood up in Congress last year -- and the year before that, -- to claim great benefits from renewing MFN should now be forced to explain exactly what those benefits have been."

I am not even a neo-con.

[monday]

"Russian Oil companies won't have the opportunity to sell their oil elsewhere."

I think you underestimate the abilities of Russian organized crime. It probably won't be oil that they will be selling but I expect whole tankers full of gasoline will be clandestinely sold to outsiders. They will magically disappear from the books.

[Tailgunner Joe]

Neocons believe in "spreading democracy." I don't.

[GarySpFc]

You just believe in spreading wars.

[Tailgunner Joe]

I believe the USA should promote pro-American regimes around the world and use it's military might to destroy our enemies.

[.cnI redruM]

Tailgunner,

When you start "The Keyboard Commando" Ping list, add my screen name.

[Tailgunner Joe]

Ask and ye shall recieve.

TJ's Russia List. On or off, let me know.

[GSlob]

In the lands of civilizations without organic tradition of democracy, democracy is possible only as a settler democracy (Australia, Canada, Israel, New Zealand, United States could serve as examples). Rhodesia example offers a good lesson on the limitations of settler democracy.
In rare cases, democracy could be introduced at gunpoint after fundamental sociopsychological collapse (Japan 1945), but this collapse of the pre-existing system is an absolutely necessary condition for that, I'd think.

[Lukasz]

Something to note, their lowest standard of gas is 93 octane, our highest.

Hilarious! One should think that such great “capitalist” like you my dear “jb6” wont defend state controlled economy (aka setting prices). I remember how you with great pleasure attacked Tymoshenko for doing the same, I didn’t defended her at that time. But now we see that once again your agenda is more important than free economy. What a surprise! / big sarcasm

[Lukasz]

Most Russian oil aren't state owned or nationalized.

Gazprom is ready to take over Sibneft from Kremlin friendly oligarch Roman Abramovich. They recently got huge credit from the western banks to buy it. So nationalization in Russia goes on.

[Lukasz]

True conservatives should never advocate price control..

“Jb6” with his sympathy to post-communist hardly may be considered as a truth conservative…

[KevinDavis]

More like Populist...

[jb6]

Gazprom is also selling off a large chunk of their stock shares this year and will hopefully eventually sell of the majority issue.

[jb6]

I don't. This is a temperary measure that will halt inflationary pressures, which oil is one of the driving assets of. I would hope that such a great economic mind as yourself can understand that.