NewsThe fuel problem in Russia is growing. Putin calls on the government and oil companies

The fuel problem in Russia is growing. Putin calls on the government and oil companies

Vladimir Putin
Vladimir Putin
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ed. PRC

8:22 AM EDT, September 28, 2023, updated: 9:15 AM EDT, October 5, 2023

Retail fuel prices are rising in Russia despite the export ban. Internal problems have led to a crisis situation not seen in the country for 5 years. Putin called on the government and oil companies to solve the fuel issue.

Vladimir Putin demands immediate action to resolve the fuel issue -  Bloomberg reports. The matter concerns rising retail fuel prices in Russia.

A weak ruble and rising oil prices have prompted Russian producers to ship more fuel for export, thereby limiting supply to the domestic market.

Additionally, in order to limit budget expenditures related to the war in Ukraine, the Kremlin has halved subsidies paid to refineries for domestic delivery.

The result was that fuel shortages began in Russia, and its price began to rise dramatically, leading to the largest fuel crisis in the country since 2018 - explains the agency.

Putin ordered to suppress export

Unable to curb the rise in domestic fuel prices before the presidential election in March next year, the government took unusually stringent steps - Bloomberg reports.

According to Putin's decree, Russia has banned the export of engine fuels from day to day. Although this measure is to be temporary, no end date has been specified. This maneuver resulted only to a certain extent, after a several percent drop, prices began to rise again.

Putin called on the government and oil companies to resolve the fuel issue. He suggested that the government could look into practices used in other sectors, such as in the export of fertilizers.

- If you supply enough to the domestic market, you can also earn abroad; such things exist and work - he said during his speech. He also ordered to communicate with the oil companies, because these, as he described, are "hens that lay golden eggs".

Stick and carrot

Deputy Prime Minister Aleksander Novak indicated that the government will revisit the decision to halve payments at a later stage. Higher government subsidies at a later time, in his opinion, "would help compensate for the difference between the export alternative and prices on the domestic commodity exchange", encouraging deliveries to domestic consumers.

But in addition to incentives, the Kremlin is also preparing a stick. The next move would be to more than double - from the current 20 thousand rubles to 50 thousand rubles - the export tariffs for companies that do not produce their own fuel, but send quantities purchased on the domestic market to other countries - Bloomberg calculates.

- In the near future, the government will make a decision about further steps, which will help stabilize the domestic market - said Novak.

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