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Gasoline Prices to Go Up
Crude oil export duties are to be increased from $140 to $136.2 per a metric ton starting from August 1, 2005. This is the fifth change in the export duties in 2005 but still it is not enough to control gasoline prices. In this case the oil duties should be driven up to $18 per ton at least.
Kommersant wrote on May 4 that crude oil export duties are a key to the regulation of domestic gasoline prices, which happened a year ago when a new order of the calculation of rates depending on the prices of Urals grade of oil was introduced. The impact of oil export duties on domestic prices for oil products is clear from the analysis of the distribution of the raw materials extracted in the country [see Kommersant as of May 4].
The calculation showed that in January, net profit from export of one ton of oil by pipelines averaged $57 with the price of Urals at $40 per barrel and the oil duties of $100.7 per ton, while the supply to the domestic market of one ton returned $67. The $10 of the difference between the return on the domestic and overseas markets accounts for the oil supplier’s choice preferring the domestic market, which led to the drop in prices. February and March saw the equaling in the returns on export and supply to the home market, following which gasoline prices rallied. Price for Urals rose to $49 per barrel in early April, while the export duties was set at $102.6 per ton basing on the monitoring during January and February when Urals cost $40. As a result, the revenues from supplies of one metric ton of oil to the internal market shrank to $56, after which the supplier preferred foreign markets and the prices kept on rising. The situation was the same in May. In spite of the fact that the price on Urals shot up to $51.24 per barrel, the increase of crude export duties to $136.2 per ton from June 1 triggered the stabilization in domestic prices in June. But when Urals grew up to $55 per barrel early July with the same oil export duties of $136.2 per ton the export rose and gasoline prices in the country soared.
The increase of the export duties to $140 per ton from August 1 with the Urals prices at $55 per barrel will lead to only a $3 percent fall in returns on the export, which will not ensure the stabilization of internal gasoline prices, as export duties have to be increased by $18 more. It can be done even without the review of the current dependence of the duties on the prices on Urals grade. The period of monitoring on oil prices, according to which export duties are updated, should be shortened.
www.kommersant.com
All the Article in Russian as of Aug. 02, 2005
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