Drivers Seethe as Gas Prices Climb

Ramil sometimes spends up to 24 hours a day in his taxi, trying to take in fares in a constant game of catch-up to stay ahead of the rapidly growing cost of living in Moscow.

Now with gasoline prices steadily rising since April, the game just got all the more difficult.

"It seems like every week the gas price rises by 10 to 20 kopeks," he said on a recent afternoon, lounging in his car at the end of Arbat as he waited for a fare to walk up to the window.

The soaring cost of food and rent is no longer the only sign of Russia's runaway inflation rate, which passed 14 percent in April, according to official statistics. Nearly all the goods in the country's consumption basket have been hit, feeding social discontent despite overwhelming support for the new ruling duo of Prime Minister Vladimir Putin and his protege, President Dmitry Medvedev.

On Saturday, hundreds of drivers rallied against rising gas prices in about 50 cities, including 200 in rain-drenched Moscow. A previous protest, in late April, saw hundreds of drivers weaving a slow train through the streets of Vladivostok, honking their horns.

Medvedev is riding high on the back of a landslide election victory following Putin's blessing. Yet the specter of spreading protests, and the expectation by citizens and analysts alike that inflation will only continue to grow, threaten to put a quick damper on his overwhelming popularity.

"The old president and the new president should both do something so that gasoline becomes cheaper," said Ramil, 43. He has been driving a taxi for four years to supplement his pension as a former Interior Ministry employee.

"Why is gasoline more expensive here than in America? Yes, we have lots of oil, but we also have lots of billionaires," said Viktor, 50, who also makes his living driving a cab.

Gasoline in Russia averages 23 rubles (97 cents) a liter. The average price in the United States, meanwhile, hovers around $3.60 a gallon, or 80 cents a liter.

The organizer of Saturday's protest, Vyacheslav Lysakov, complained that excise duties on octane gasoline are about 70 percent in Russia, while it was less than 30 percent in United States and China.

"Why should the price of fuel be higher than inflation level in an oil-producing country?" he said Monday. "Why should our motorists pay more for oil than non-oil producers like China? These are legitimate questions every motorist is asking."

Popular reasoning tends to put the blame on the 1990s-era gaggle of oligarchs who once ruled heavy industry in the country, pointing to a profit-driven conspiracy to fill their pockets at the expense of the average man on the street.

Yet, analysts say, it appears that Russia could be well on its way to being victim of the curse of so many resource-rich nations — where industry and business suffer as all effort goes toward extracting the oil, gas and coal that lie under a country's territory, at the expense of technology-driven industry.

The result can be explosive. Violent riots spread across Iran, OPEC's second-largest exporter, last summer as the government, worried about possible international sanctions, instituted gasoline rationing in an attempt to get people to use less gasoline. Lacking refining capacity, the country imports about 50 percent of its gasoline.

Things aren't that bad in Russia — yet.

Ramil said he drives about 250 kilometers a day and spends roughly 500 rubles to fill up his tank each morning. Add to that his 24,000 ruble rent, rising food costs that mean he spends around 1,000 rubles a day to eat, and suddenly his salary of 65,000 rubles per month appears less impressive.

"I think prices will keep growing," he said. "The government should get involved."

Yet the rapid rise of gasoline prices in Moscow is partly the result of the government's move to lift pre-election price controls, both formal and informal.

"Many unpopular moves were left for after the elections," said Elena Herold, an analyst at PFC Energy. "Gasoline prices are not as contained by the 'agreement between the government and producers' as before the election."

That, in turn, leads to increased transportation costs, boosting prices all around, Herold said.

"Inflation can be observed in all petrostates lately due to an avalanche of oil money pouring into those economies, and in Russia, preceding the elections there were substantial amounts of money put on the public sector, which further fueled the inflation," Herold said.

Vladimir Chichkov, who took part in Saturday's protest, said he could not stand by while inflation whittled away at his income.

"Our traditional problems are bad roads and too many fools," said Chichkov, who worked for 15 years as a taxi driver before becoming a gypsy-cab driver. "Doesn't anyone realize that higher fuel prices are also driving up the price of basic foodstuffs?"

The prevalent mood among motorists is combative, he said, adding that authorities should thank the bad weather in Moscow for damping enthusiasm for the protest. "They won't be so lucky next time around," he said.

While rising prices may be tough on the average Russian, they are not necessarily a bad thing, said Yevgeny Gavrilenkov, chief economist at Troika Dialog.

"Gasoline prices should go higher and higher to stimulate more efficient use," Gavrilenkov said. "It's not good when prices are low — you already can't move in Moscow.

Staff Writer Tai Adelaja contributed to this report.