Wholesale traders are selling gasoline below cost in Russia as oil prices collapse amid the coronavirus pandemic. Companies in the Russian oil industry are losing several thousand rubles from each metric ton of fuel, experts at the Commodity Market Analytics independent agency report.
The wholesale price of regular octane 92 grade gasoline fell 11% from April 13 to 19, or by more than RUR 4K ($50) per metric ton. Gasoline producers pay excise tax, the ‘dampening mechanism’ duty, VAT and mineral extraction tax. As a result, the fuel’s production cost rose higher than its price.
The experts note that fuel prices are falling as demand shrinks due to lockdown in big cities, where traffic has notably decreased.
Another reason, according to the analysts, is the increase in damper payments. This mechanism, launched in 2018, was aimed at restraining fuel prices at pumps during high demand; it also keeps fuel prices from falling when the oil price is low.