The same product may have different prices in different countries of the world. This difference is sometimes quite noticeable. The price is influenced by profitability and costs associated with production, which is individual for each country. Competition makes it possible to equalize prices among producers, but this fact does not apply to gasoline, prices for which vary greatly in different countries.
Long gone are the days when a car signified wealth and was a luxury item. Today, every third person has their own car. The factories produce cars for any buyer and offer both budget models and premium products.
It is not difficult for a working person to purchase a car; you can save the required amount of money or take out a loan, but maintenance will require significant costs. Just look at fuel costs - in the Russian Federation this figure is close to a dollar per liter. It's quite expensive. What is the situation in the world?
Gasoline prices in other countries
Annual monitoring of the pricing policies of various countries regarding A-95 fuel shows that this criterion varies significantly in different parts of the world.
Let's look at a few examples in dollars:
- in Venezuela about 0.016;
- Turkmenistan approximately 0.023;
- in Iran, fuel costs only 8 cents;
- UAE approximately 41 cents;
- in Azerbaijan 48 cents;
- Kazakhstan - 0.6 dollars;
- in America it is 0.75;
- Tajikistan – 0.83;
- they pay a little more in Uzbekistan – 0.86;
- Argentina – 0.94;
- in Belarus approximately 0.95;
- Thailand is at the same level, about 0.96;
- Russia and Armenia 0.97 each;
- a little more expensive in China - 0.98;
- Canada – exactly a dollar;
- in Australia and Chile a cent higher;
- South Africa and India are 1.07 and 1.12 respectively;
- Kenya at 1.14;
- in Singapore 1.27;
- This figure is slightly higher in Ukraine - 1.3;
- The Japanese have to pay 1.42;
- Kenya – 1.46;
- In Brazil, its value reaches exactly one and a half;
- In Italy and England - 1.7 and 1.74, respectively;
- Monaco and Germany at 1.8;
- they pay a little more in Denmark – 1.82;
- almost 2 dollars in Norway;
- in Eritrea more than 2.5.
A comparative analysis clearly demonstrates that Russia belongs to the list of countries with the highest fuel costs.
Where does the cost difference come from?
Analysts identify several reasons for pricing depending on the regional location of the country.
The most significant of them are the following:
- Availability of own sources of natural resource deposits. When a country exports minerals, such as petroleum products, which should be more affordable. This is consistent with the market in countries such as Venezuela and Japan, but the nature of Russia's pricing policy is questionable;
- Availability of own enterprises for processing oil products. There are such plants in Venezuela, Iran, Kazakhstan, where gasoline costs up to 60 cents. The Russian Federation also has its own enterprises, but this product here is more expensive than 90 cents;
- Competition policy. The presence of a large number of plants involved in oil production and refining leads to the availability of the product. However, Russia and Canada are examples of exceptions to such situations where the price remains high despite stiff competition. It follows that it is formed by the method of artificial inflation;
- State structure. Analytics experts talk about the influence of the political regime on the availability of petroleum products. It is more available in authoritarian states such as Venezuela, Libya, Iran, Turkmenistan. They import oil products, and all profits and the economy as a whole are in the hands of government authorities. Such regimes can cause indignation among residents due to the infringement of their rights, so the cheapness of products is achieved artificially;
- Internal political situation. Analysts link the high cost of fuel to the level of income of citizens. An example is Norway, where the high cost of this product is established due to the high standard of living. This dependence, again, is not suitable for Russia, since Uzbekistan, the Russian Federation and the United States have almost the same availability of fuel, and the income of citizens is completely different.
The price of this product in the CIS varies significantly. Let's compare post-Soviet states using the A-92 brand as an example:
- In Turkmenistan the figure is the lowest, only $0.02;
- a little more in Azerbaijan - about 0.46;
- Kazakhstan at 0.56;
- The Russian Federation has a tariff equal to 0.67;
- Tajikistan – 0.8;
- Uzbekistan is slightly higher, which is 0.83;
- in Belarus and Armenia 0.91 and 0.96 respectively;
- Ukrainian citizens pay almost a dollar (0.99);
- In Moldova, the petroleum product is the most expensive – 1.14.
At the same time, the government of Belarus has established a single cost of fuel at all vehicle refueling points, which is due to the state’s monopolistic policy in relation to all petroleum products. Moldova is forced to sell this product to its citizens at the highest price after the conflict with Russia, when the price of oil for this country was determined at the world level.
Since there is a constant increase in tariffs in the territory of the former USSR, many citizens also prefer to use gas. It is very possible that in the future car owners will refuse to refuel their cars with A-95 gasoline due to its cost.
Despite the price of gasoline in Russia, it is still significantly lower than in England. Norway, Japan and Ukraine also sell it at their gas stations at a much higher price.
For example, Venezuela. Today, this country sells the cheapest gasoline in the world. The price for it in this “paradise for motorists” is $0.05 (yes, five cents) per liter. For comparison, a bottle of drinking water in Venezuela is one and a half. Where else can you get gas for the price of a bottle of water? Nowhere. But, gasoline consumption per capita in Venezuela does not exceed the gasoline consumption of a small state, for example, such as Liechtenstein. Although the territory of Venezuela, compared to Liechtenstein, is simply huge. It is not fashionable to drive a car in Venezuela. Another interesting fact: the price of gasoline in Venezuela is strikingly stable. It has not changed since 1989. It was this year that there was the last increase in the price of gasoline (apparently, before that it cost four cents). And, by the way, this “global” rise in price almost became the cause of another revolution. Oh, these Venezuelans, just give them a reason.Also inexpensive
Then Iran follows Venezuela with a large (compared to the local price) margin. There, a liter of gasoline sells for ten cents - twice as much as in Venezuela.More recently, the third place in countries with cheap gasoline was rightfully occupied by Libya ($0.14 per liter), but political problems in Libya greatly influenced the price of gasoline, and now it costs differently in different parts of the country. In some places thirty cents, and in some places even per liter.
Therefore, Saudi Arabia is in third place. There, a liter of gasoline sells for $0.13. Next: Qatar, Bahrain, Kuwait, Oman, Yemen, Algeria, Egypt.
Price issue
Why is gasoline so cheap in these countries? Purely for political reasons. Dictators are in power in the above countries. In order to support their authoritarian regime and prevent popular outrage, they artificially reduce the price of gasoline. If the countries were not Muslim, vodka could be made cheaper. But in Muslim countries, “black gold” is valued higher than “white gold.” However, they do not sell their gasoline for export at the domestic price.Therefore, in other countries that do not have oil wells and authoritarian regimes, gasoline is much more expensive. The most expensive is in Norway – 1.86 euros per liter. Not far from Norway on the list of countries with expensive gasoline are Italy and Holland. There the price of a liter of gasoline is the same - 1.83 euros. Denmark comes next with a price of 1.77 euros. And Greece is slowly catching up to it.
Gasoline is a colorless flammable liquid consisting of a mixture of light hydrocarbons. It is obtained as a result of oil refining. The term was first used by the German chemist Mitscherlich in 1833, with the help of which he designated a derivative of benzenoid acid. Today, gasoline is considered one of the main types of fuel for automobile engines and is sold at special gas stations all over the world.
Oil producing countries
Oil production in the fall of last year exceeded all previous indicators.
Sometimes many oil companies do not have time to process the amount of oil that is extracted from the bowels of the earth. The situation has led to many trying to export crude oil. The solution to the situation is quite urgent, because it is necessary to determine whether exports are being maintained or whether the emphasis is on domestic markets? The second option entails fierce competition, the search for new niches through which it will be possible to get real and permanent profits. To these difficulties should be added the fall in demand for refined petroleum products, increased prices for supplies and services, and outdated technologies that require increased costs. But this does not prevent some countries from selling the cheapest gasoline in the world.
Where is it cheaper?
This is what the five countries look like where gasoline fuel is quite cheap:
- Venezuela: 2 rub.
- Saudi Arabia: 5 rub.
- Kuwait: 12 rub.
- Egypt: 15 rub.
- UAE: 28 rub.
Briefly about the leaders
Venezuela is considered a country where socialism won. Residents like their existing system, which gives them free housing and pensions equivalent to two hundred dollars.
In comparison, gasoline in this country costs much less than water.
The list of countries continues with Saudi Arabia, which is considered one of the largest oil producing countries. The oil industry accounts for more than eighty percent of the total state budget and more than ninety percent of exports. It turns out that oil represents the main wealth of the country.
There is another rich state in the Persian Gulf - Kuwait. But he also had to raise gasoline prices in the fall, bringing it to today’s cost.
However, the government, in order not to cause discontent among the people, established a free quota of seventy-five liters per driver for local residents. The oil reserves in the country are such that you can live without denying yourself anything. Per capita oil income is so large that the state uses this profit to provide benefits for newlyweds, pay salaries for teachers and doctors, issue loans, and pay for education abroad with scholarships for students.
And Egypt had to adjust the price of gasoline, which resulted in higher prices for products. The crisis has caused serious damage to the country's economy. And the change in fuel prices was caused by the need to close holes in the state budget.
The UAE consists of seven emirates, each of which represents an independent state. The fall in oil prices has also affected fuel prices in this country - gasoline has become cheaper relative to drinking water. This is due to the fact that there is an oversupply of raw materials on the market. The situation was further aggravated by the fact that Western sanctions were lifted from Iran.
Oil embargo
Its withdrawal for export of American oil reserves may somewhat displace the position of Russian and Middle Eastern “black gold”.
The need for this was caused by the fact that a large number of American enterprises operate only on cheap types of oil, the density of which is quite high. It is imported from Canada, Mexico and Venezuela. The process of refining its light oil is flooding the market.
Regional conflicts
Lower oil prices around the world could create relative calm. As experts note, with the cost of a barrel of oil more than seventy-seven dollars, countries that have their own production begin to conflict with each other more actively, since they do not really need international support. The only way to reduce their belligerence is to reduce the cost of purchasing oil.
MOSCOW, November 8 – RIA Novosti, Alexey Zakharov. Fuel costs are one of the main cost items for drivers. Many of them are trying to save money and are even willing to specifically look for gas stations with cheap gasoline. About how gasoline prices depend on the region, and whether it is worth choosing a gas station based only on the price of a liter of fuel - in the RIA Novosti material.
To the neighbors for gas station
Gasoline prices in different regions differ, and significantly. The gap between the lowest price (35.87 rubles per liter of AI-95 in the Ivanovo region) and the highest (56 rubles per liter in Chukotka) is indeed impressive (for more details, see the infographic “Where is the most expensive and cheapest gasoline in Russia” ).
Why so expensive? - residents of regions that find themselves among the price leaders may ask.
The high price of gasoline in Chukotka is due to the peculiarities of northern delivery.
“The price fluctuates greatly from batch to batch,” said Dmitry Makhonin, head of the regulatory department for the fuel and energy complex of the Federal Antimonopoly Service of Russia, “and sometimes there are a lot of intermediaries, which affects the cost.”
The remoteness factor also works in Kamchatka: fuel comes here from factories in Khabarovsk and Komsomolsk-on-Amur. Trains go to Nakhodka, where the products are loaded onto ships, and then go to the Petropavlovsk-Kamchatsky port, and then by fuel tankers throughout the region, Makhonin explained.
Whether it is worth driving to a neighboring region if he is among the lucky ones with cheap gasoline is up to each driver to decide. It all depends on the distance that will have to be covered in pursuit of cheapness.
Pricing factors
The distance required to transport fuel is one of the key, but not the only and not the main factor influencing the final price of gasoline.
Experts from the Russian Fuel Union emphasize that the pricing structure in different regions of Russia looks similar (For more details, see the infographic “What is included in the cost of a liter of gasoline”).
The proximity of an oil refinery (or refinery) will help reduce the retail price, and its remoteness will, on the contrary, increase it. For example, at gas stations in Moscow, fuel is supplied from the Moscow and Ryazan oil refineries. And if one of them stops for repairs, then other factories are connected, for example, in Tatarstan, says automotive expert and director of Radio Strana Igor Morzharetto.
In large cities, the cost of servicing gas stations is higher due to the cost of renting land and other costs.
The cost of a liter of gasoline can also be influenced by the policies of regional authorities. For example, in the Kemerovo region, fuel prices are noticeably lower than in neighboring regions, even despite logistics costs, precisely due to the policies of the regional authorities, Makhonin clarified.
In addition, prices depend on the purchasing power of the local population and the size of the regional vehicle fleet, noted RTS Executive Director Grigory Sergienko.
The price of fuel also depends on the marketing policies of companies. RIA Novosti could not obtain comments from the companies at the time of publication of the material.
“The FAS, as a rule, does not interfere in this policy,” Makhonin said. For example, Gazprom Neft believes that prices for motor fuel in different regions should be based on the actual demand for the product. While LUKoil relies on the depth of oil refining and high quality fuel, the company’s prices are traditionally higher,” said Makhonin.
However, even in the same city there may be different prices at gas stations of the same company. At gas stations on main routes, fuel can be more expensive than, for example, in residential areas, says Makhonin.
Don't chase the cheap
However, as calculated by the Moscow Fuel Association (MTA), only 29% of motorists are guided by the cost of fuel when choosing a gas station. More than 35% of them fill up with fuel at gas stations that have been tested through personal experience. And they do it right.
Experts point out that some independent companies, in order to lower the price, sell straight-run gasoline with added additives at gas stations, which can lead to engine failure.
The facts of the sale of surrogate fuel at a number of independent gas stations to RIA Novosti were also confirmed by Dmitry Makhonin from the FAS. And due to the low prices at independent gas stations, owners of large chains are also forced to adjust their sales policies.
“You need to go around cheap gas stations. Gasoline may cost 1-1.5 rubles less than the regional average. But if, for example, it is 5 rubles cheaper, then you need to turn around and leave. Most likely, it will be straight-run gasoline, which can lead to car breakdown,” automobile expert Igor Morzharetto told RIA Novosti.
The situation with low-quality gasoline is similar to the problem of burnt vodka. “They catch it. They close it, but some continue to spill it, while others continue to drink it,” the expert explained.
Gasoline prices both in Russia and around the world do not depend as much on oil prices as many people think. The cost of gasoline at gas stations is primarily related to taxes set by the state. At the same time, in Russia, according to Bloomberg, gasoline is one of the cheapest in the world - eighth out of 61 (the number of countries the agency studied). But, taking into account the income of the population, gasoline in Russia is the least affordable in Europe. Rain explains how prices for rain are formed in Russia, why they are rising and who is holding them back.
How much do they spend on gasoline in Russia?
A liter of gasoline in Russia costs $0.57. You can only get cheaper gas in seven countries studied by Bloomberg: Venezuela, Kuwait, Saudi Arabia, Iran, Malaysia, the UAE and Nigeria. Despite the fact that most of the countries with the cheapest gasoline are oil exporters, gasoline is inexpensive there mainly due to government incentives and preferential taxation, and not the volume of oil produced, explains Mikhail Krutikhin, partner at the consulting company RusEnergy.
Image: Bloomberg
In terms of gasoline availability, Russia is in 33rd place in the Bloomberg ranking. A liter of gasoline costs 2.35% of average income per day, which, according to the agency, is 1,386 rubles. For comparison, in Norway, where gasoline is almost the most expensive in the world (the most expensive is in Hong Kong), residents pay on average much less for one liter - 0.90% of their daily salary, in the USA - 0.43%, and in Germany - 1.28%. India accounts for the largest portion of petrol revenues at 21.19%.
Image: Bloomberg
On average, a Russian spends 2.41% of his salary on gasoline per year, which is one of the highest rates in the world. On average, a motorist in Russia fills up 333.1 liters of gasoline per year.
How prices are formed
In Russia, about 60% of the cost of gasoline comes from taxes and excise taxes, explains Krutikhin. These include gasoline excise taxes, mineral extraction taxes, corporate income taxes, and other levies. This figure varies by region and oil company. And the price of oil, according to various estimates, is 6-7% of the cost of gasoline, explains Krutikhin.
Gasoline prices are formed under the influence of the export netback (export price minus duties and transportation costs), which depends on export duties, as well as excise taxes and VAT, confirms Denis Borisov, director of the Ernst & Young Center for Oil and Gas in Moscow. “Those graphs that try to show taxes in the price of gasoline are unlikely to pass the relevance test,” he said.
In 2016, the government already increased excise taxes on gasoline twice: 1 and 1. After the April increase, the Ministry of Finance predicted a possible increase in retail gasoline prices by 7%. FAS growth by 2%.
A major contribution is made by the ruble exchange rate and the balance of supply and demand. The fall in world oil prices, therefore, affected the cost of gasoline only indirectly. However, gasoline prices did not fall following oil, but, on the contrary, rose: the government was forced to make up for budget revenues lost due to cheap oil by increasing taxes and fees. Thus, additional budget revenues from the increase in excise taxes on fuel this year amount to 89.3 billion rubles.
Another example of the indirect influence of oil prices on the cost of gasoline is the weakening ruble following oil. At the beginning of autumn 2014, for example, a barrel cost 100 dollars - 3,700 rubles. Now, having more than doubled in price in dollars, in rubles oil has lost only 20% of its value (2,960 rubles). Thus, domestic oil prices have not fallen as much as global ones.
The Federal Antimonopoly Service (FAS) also monitors retail gasoline prices. Its director, Igor Artemyev, told Vedomosti that in 2015, gasoline prices increased by 4.8% with inflation at 12.9%. According to him, this year prices will also rise no higher than inflation.
“This is not just a forecast, it is a position based on all our previous activities. Over the past 7-8 years, prices have changed with approximately the same dynamics, despite the fact that oil prices rise to $100 or fall,” explained Deputy Head of the FAS Anatoly Golomolzin.
According to Krutikhin, in recent years the FAS has not controlled gasoline prices; they depended on the companies’ agreements with government officials and the president. The tax maneuver also had no effect on prices. Companies were promised to reduce export duties by increasing the mineral extraction tax, and in the domestic market, export prices for oil do not have a significant impact on gasoline, says Krutikhin.
“FAS does not regulate retail prices for gasoline. Officials may voice forecasts for retail prices for petroleum products, but such things cannot be equated with an impact on prices and the behavior of market participants. The task of the FAS is to develop the petroleum products market, and the agency is doing an excellent job with it,” says Mikhail Turukalov, general director of the Commodity Market Analytics agency.
At the same time, wholesale gasoline prices are at their maximum in June. Wholesale and retail prices for petroleum products are directly interrelated, explains Turukalov: “If wholesale prices grow so much that retail operators begin to suffer losses from trading petroleum products, then gas stations begin to raise prices and do this until an acceptable level of profitability is established,” he explains.
In general, the Russian gasoline market is now much more surplus than several years ago. Thanks to the modernization of refineries and a slight decrease in domestic gasoline consumption, there is no need to import Belarusian goods to Russia this year, the analyst says.