Independent Gas Stations in Russia Face Closure

Russian independent gas stations are at risk of closure due to disruptions in gasoline supplies and local shortages of goods, the Russian Fuel Union said in a letter to Deputy Prime Minister Alexander Novak, RIA Novosti reported.

In some regions, there are already prolonged interruptions in the supply of gasoline.

The negative profitability of retail trade, combined with the lack of goods, has led to the closure of individual gas stations. The continuation of this situation threatens independent gas station owners, who account for about 60% of the total number of gas stations in the country, with the termination of operations.

Russian Fuel Union

Problems that significantly affect the gasoline market, according to the union, are primarily related to a decrease in the production and exchange sales of gasoline and, as a result, an increase in wholesale prices, which have equaled - and in some regions exceeded - retail prices.

There is also a significant disruption in the timing of exchange gasoline shipments. The volume of shipped goods purchased, according to the Russian Fuel Union, is significantly lower than the transactions concluded, and the delivery times are increased to 1.5-2 months.

Given the prepayment terms for the purchase of exchange goods, these factors lead to the erosion of working capital and an increase in the credit burden. At the same time, oil companies ship to their own sales units in full, to the detriment of the supply of exchange goods purchased by independent buyers.

Russian Fuel Union

The Russian Fuel Union also believes that the ban on gasoline exports has hardly changed the situation, and the situation with diesel fuel is less critical. But the overall reduction in sales of exchange goods and the increase in delivery times have led to a disruption in the balance of supply and demand, an increase in wholesale prices and zero profitability of retail sales. A ban on exports for non-producers will also not lead to a significant increase in supply due to the small volume of these deliveries due to the current excess of domestic prices over export parity.

Seasonality is beginning to affect the production of summer diesel fuel - as the cold period approaches, refineries are increasing the production and sales of frost-resistant (winter) grades and forming reserve stocks of winter fuel. Because of this, the production and exchange sales of summer diesel fuel have been reduced. At the same time, supplies of summer diesel fuel from refineries for export continue.

In this regard, in order to maintain the stable operation of retail, the union proposes to consider several proposals. One of them is to ensure the implementation of the Ministry of Energy's recommendations on the volume of small wholesale and exchange sales, as well as compliance with the timing and volume of shipments under exchange transactions. It is also proposed to ban the export of diesel fuel for oil companies before the onset of cold weather with its sale in the near future.

In addition, the Russian Fuel Union proposes to revise the approach to calculating the consumer price index, replacing the accounting of targeting the growth of retail fuel prices with a composite inflation index that takes into account the growth of tax and credit burdens, as well as a number of factors that make a major contribution to the growth of operating expenses of gas stations and characterized by hyperinflationary growth.