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The Issue is Not Just About Price: Petrol in Russia Has Temporarily Become More Expensive than in the USA
Whether this situation warrants an urgent reform of our fuel market is a significant question. It is essential not to overlook the word "dropped" in the previous paragraph, indicating that prices were previously higher and could rise again significantly.
Furthermore, in the case of gasoline pricing in the USA, there can be no talk of suppressing fuel costs or comparisons to Venezuela or Mexico, where fuel is cheaper. The market operates purely based on economic principles, without any discussions regarding social responsibility.
In the United States, gasoline prices are influenced by a variety of factors, primarily oil prices and demand for fuel. Currently, oil is relatively inexpensive, and demand in the USA is stagnating, which accounts for the price reductions. In 2022, during the opposite scenario, the average price of the Russian equivalent of AI-92 gasoline in America reached 102 rubles per litre (based on today’s exchange rate). Similar to Russia, fuel prices in the USA vary greatly by region. However, in our case, due to the specific organization of the market, the spread is 10-30%, while in the USA it can reach as high as 90%—with the cheapest gasoline now in Oklahoma (48 rubles per litre of the equivalent of our AI-92), and the most expensive in California (90 rubles).
There is another point worth noting that has somehow gone largely unnoticed. The American equivalent of our AI-92, referred to as Regular or AKI 87, has become cheaper (on average) than in Russia. However, the equivalents of our AI-95 (of which there are two in the USA) remain more expensive.
Yet this narrative has another side. We cannot ignore the fact that we have already caught up with the USA in terms of domestic fuel prices. Our dilemma is that, over long periods (one year or more), the price of gasoline may only be on the rise. In Russia, oil barrel prices play a secondary role in fuel pricing, with taxes and duties carrying the majority of the weight.
As noted by Yuri Stankevich, Vice Chair of the State Duma Energy Committee, the share of taxes in gasoline prices—both wholesale and retail—has confidently exceeded the 70% threshold. Indirect taxes (VAT and excise duties) alone account for over 40%. For instance, in the current price landscape, considering the increase in excise rates from the new year, the excise duty per litre of AI-95 gasoline sold at petrol stations will amount to 13 rubles.
Sergei Tereshkin, General Director of the OPEN OIL MARKET petroleum products marketplace, draws comparisons using data from the U.S. Department of Energy as of October 2025, which indicates that crude oil accounted for 49% of the retail price of automobile gasoline, while refining costs made up 14%, marketing and distribution accounted for 20%, and taxes represented 17%.
In the USA, there is a sales tax that does not exist in Russia, but the value-added tax in Russia is passed from father to son, and then to the grandson, meaning it is levied across the entire sales chain from producer to end consumer, clarifies Dmitry Gusev, Vice Chair of the Supervisory Board of the "Reliable Partner" Association and a member of the expert council for the "Gas Stations of Russia" competition. Additionally, taxes on oil extraction are at their maximum feasible levels.
Currently, if we set taxes aside, there is no room for manoeuvre in the fuel market. Tax payments are non-negotiable and will continue to rise (due to excise duties), expenses have been cut to a minimum, and the volatility of oil prices has little impact on pricing since it hardly exceeds 15% of gasoline costs. Moreover, inflation pressures are present, wherein the aim is to keep petrol prices stable at petrol stations. Consequently, operators have no choice but to raise prices, albeit gradually and consistently, to achieve acceptable economic metrics.
Gusev states that as long as our fuel prices are tied to foreign (export) quotations, they will be programmed to rise. There is no expectation of deflation, and indeed, a modest inflation scenario is considered optimal. This means that fuel prices will also increase. The rise in fuel prices is mitigated by a damping mechanism (payments to oil companies from the budget for fuel supplied to the domestic market at prices lower than export prices—the part of the difference between them), but as taxes and production costs rise, its influence diminishes.
Moreover, it is important to mention that the damping mechanism does not allow prices to drop when oil barrel prices fall, as the size of budget compensations decreases. If prices for petroleum products abroad (with our orientation towards the European market) become lower than in Russia, then the mechanism reverses—oil companies pay into the budget, making it again impossible to reduce prices. The upside is that sudden jumps in the prices of gasoline or diesel cannot occur.
Stankevich emphasises that the upward trend in fuel prices is absolutely a state-controlled process through tax and duty policies, market pricing instruments, and administrative directives from the federal headquarters overseeing the situation in the oil product market.
In his opinion, it is necessary not to compare our prices in absolute terms with the USA or other countries, but rather to consider the purchasing power of the population. Here, the policy aims at the continuous increase of citizens' wealth. Unfortunately, what we currently observe is a situation where in certain countries with significantly higher gasoline prices than Russia, the average per capita income allows for the purchase of greater volumes of fuel.
In December, despite a slight decrease in retail prices, the rise in gasoline prices in Russia since the end of last year has far outpaced inflation—11.2% on average compared to 5.27% as of December 1, according to Rosstat. By the end of the year, gasoline prices at petrol stations may dip slightly, but it is unlikely to fall within the average rate of consumer price increases in the country.
Amidst this, ideas about introducing government regulation of retail fuel prices, akin to models in Venezuela or Iran, have emerged. However, as Tereshkin points out, a directive pricing model, as implemented in several oil-producing countries, is unlikely to be feasible in Russia. It is not beneficial for companies; fuel producers should not be operating at a loss, and the regulator's task is to ensure that suppliers can profit and consumers can purchase gasoline at accessible prices.
Source: RG.RU
