Russian Fuel Association Vice President Evgeny Arkusha
Photo: Dmitry Lekay
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Freezing Petrol Prices Leads to Natural Selection
Russia’s Industry and Energy Minister Viktor Khristenko met with the chiefs of oil companies Monday to mull over the fuel market performance till March of 2008. The meeting shocked small-business traders. The petrol prices were skyrocketing in November, but the agreement of big companies and the government on freezing their retail component has zeroed profits of petrol stations. Freezing prices till March will trigger a wave of bankruptcy with big numbers of independent traders taken over by oil giants as a result.
Federal Statistics Service released yesterday the data on growth in retail petrol prices. It was 0.6 percent from November 6 through 12, which is the absolute record of this year. Wholesale prices for basic Petrol 92 stepped up 5.4 percent on average in November. The wholesale price increased to 21,870 rubles by November 19, nearly reaching the retail one and zeroing the retail margin.
On Monday, Russia’s Industry and Energy Minister Viktor Khristenko talked in private with chiefs of the biggest oil companies. The shared sentiment of the government and producers was to freeze retail prices for petrol.
“I’ve seen the verbatim report of the meeting. We are shocked by this standing of government. Oil companies are hiking prices, but one cannot raise the retail, as there is the political order. We don’t say it is being done intentionally to redistribute the market, but it is the death for quite a lot of independent [firms],” said Russian Fuel Association Vice President Evgeny Arkusha.
”The freeze is nothing else but the populist step on the threshold of elections, there are no market vehicles here,” commented Anatoly Karetnikov from Petromarket, explaining that the giants can exist with the zero margin, as they also profit from exports, refining and small-scale wholesale. Independent companies, however, have no opportunities of the kind, so the moratorium will probably lead to the market redistribution.
www.kommersant.com
All the Article in Russian as of Nov. 21, 2007
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