Comparative Analysis of Pricing Regulation Models in Fuel Markets: Lessons for Russia

In recent years, Russia has seen many changes in its fuel market regulations, including the introduction of a large tax maneuver and a damping mechanism, as well as quasi-directive control over retail prices. These changes have placed an increased burden on the federal budget and increased uncertainty for oil companies. The purpose of this study was to identify patterns and consequences of different pricing regulation models in fuel markets to improve the Russian regulatory framework. The study analyzed structural options for regulating fuel markets in 149 countries and classified pricing models. Based on this analysis, optimal tools were identified for improving Russia's current model. It was found that direct forms of price regulation are typical in developing countries, used as a means of maintaining social stability. However, this can lead to fiscal risks for government budgets. The Russian model is not immune to these risks. Comparison with the experience of countries with similar institutional characteristics supports the effectiveness of more liberalized pricing models. These models increase the adaptability of the economic system and maintain a balance between social stability and economic benefits for businesses. The transition to a more liberalized form of pricing regulation can be achieved through a gradual process of removing the damping mechanism. This can be done by introducing targeted subsidies for consumers and revising fuel excise rates based on the oil price.

oil industry, industrial policy, fuel pricing, taxation of the oil industry, damping mechanism, pricing regulation models, subsidies, excise policy

1. Акимов В. Н. Анализ динамики цен на моторные топлива на российском рынке в 2000–2020 гг. в свете налоговой политики в нефтяной отрасли // Научные труды: Институт народнохозяйственного прогнозирования РАН. 2020. С. 157–185. DOI: 10.47711/2076-318-2020-157-185.

2. Бобылев Ю. Н., Идрисов Г. И., Синельников-Мурылев С. Г. Экспортные пошлины на нефть и нефтепродукты: необходимость отмены и сценарный анализ последствий. М. : Издательство Института Гайдара, 2012. 84 с.

3. Федоров С. И. Регулирование розничных цен на моторное топливо: влияние характеристик социального порядка // Управленец. 2024. Т. 15. № 1. С. 83–96. DOI: 10.29141/2218-5003-2024-15-1-6.

4. Arze del Granado, F., Coady, D., & Gillingham, R. (2010). The Unequal Benefits of Fuel Subsidies: A Review of Evidence for Developing Countries. IMF Working Paper, WP/10/202. https://doi.org/10.2139/ssrn.1750690

5. Baig, T., Mati, A., Coady, D., & Ntamatungiro, J. (2007). Domestic Petroleum Product Prices and Subsidies: Recent Developments and Reform Strategies. IMF Working Paper, WP/07/71.https://doi.org/10.5089/9781451866353.001

6. Baunsgaard, T., & Vernon, N. (2022). Taxing Windfall Profits in the Energy Sector. International Monetary Fund, NOTE/2022/002.

7. Blanchard, O., & Johnson, D. (2017). Macroeconomics. 7th edition. Pearson Publ.

8. Bragoudakis, Z., & Sideris, D. (2021). Asymmetric Price Adjustment and the Effects of Structural Reforms and Low Demand in the Gasoline Market: The Case of Greece. Journal of Applied Economics, 24(1), 504–522. https://doi.org/10.1080/15140326.2021.1922188

9. Clements, B., Jung, H.-S., & Gupta, S. (2006). Real and Distributive Effects of Petroleum Price Liberalization: The Case of Indonesia. IMF Working Paper, WP/03/204.

10. Cnossen, S. (2005). Theory and Practice of Excise Taxation: Smoking, Drinking, Gambling, Polluting, and Driving. Oxford University Press. https://doi.org/10.1093/0199278598.001.0001

11. Coady, D., Flamini, V., & Sears, L. (2015). The Unequal Benefits of Fuel Subsidies Revisited: Evidence for Developing Countries. IMF Working Paper, 210(202). https://doi.org/10.5089/9781455205325.001

12. David, V. (2010). The Politics of Fossil-Fuel Subsidies. IISD Publ.

13. Ellis, J. (2010). The Effect of Fossil-Fuel-Subsidy Reform: A Review of Modelling and Empirical Studies. IISD Publ. https://doi.org/10.2139/ssrn.1572397

14. Goodwin, P., Dargay, J., & Hanly, M. (2004). Elasticities of Road Traffic and Fuel Consumption with Respect to Price and Income: A Review. Transport Reviews, 24(3), 275–292. https://doi.org/10.1080/0144164042000181725

15. Hughes, J., Knittel, C., & Sperling, D. (2008). Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand. The Energy Journal, 29(1), 113–134. https://doi.org/10.5547/ISSN0195-6574-EJ.Vol29-No1-9

16. Kojima, M. (2016). Fossil Fuel Subsidy and Pricing Policies: Recent Developing Country Experience. World Bank Policy Research Working Paper, WPS7531. https://doi.org/10.13140/RG.2.1.2940.8400

17. Krugman, P., & Wells, R. (2015). Microeconomics. 4th edition. Princeton University Publ.

18. Mahdavi, P., Martinez-Alvarez, C., & Ross, M. (2022). Why Do Governments Tax or Subsidize Fossil Fuels? The Journal of Politics, 84(2), 1–37. https://doi.org/10.1086/719272

19. Radchenko, S. (2005). Oil Price Volatility and the Asymmetric Response of Gasoline Prices to Oil Price Increases and Decreases. Energy Economics, 27(5), 708–730. https://doi.org/10.1016/j.eneco.2005.06.001

20. Sterner, T. (2007). Fuel Taxes: An Important Instrument for Climate Policy. Energy Policy, 35(6), 3194–3202. https://doi.org/10.1016/j.enpol.2006.10.025

21. Sterner, T. (2012). Fuel Taxes and the Poor. RFF Press. https://doi.org/10.4324/9781936331925

22. Tirole, J. (1988). The Theory of Industrial Organization. MIT Press. https://doi.org/10.2307/2554286