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. Last Updated: 07/27/2016

Moscow Gas Drought Eases After Price Hike

Mayor Yury Luzhkov signed a decree boosting the official price of gas in Moscow by about 25 percent Tuesday, and by the end of the day there were signs that the capital's week-long gas shortage was coming to an end.


For the last week Luzhkov had resisted following the lead of other regions which raised their prices Nov. 1, but economists said he relented under the pressure of the market, which produced empty pumps in Moscow.


The official price of a liter of 92 octane gasoline rose as of Tuesday to 500 rubles (about 16 cents) from 400 rubles, while 76 octane rose to 380 rubles from 330 and diesel increased to 390 rubles from 320.


Dealers are allowed to add 10 percent to the official price, but Moscow's many uncontrolled gas stations charge far more, up to 1,000 rubles a liter. There are no controls on the price of higher octane gasoline.


Over the weekend as many as 100 cars lined up at individual stations with drivers waiting, not always patiently, for meager amounts of gas.


On Monday, however, the lines disappeared as stations closed down, posting signs saying nyet benzina -- no gas.


Tuesday evening gas began to be available again at the stations after imposition of the new prices and queues returned to the streets.


The signs of availability of gas, however, did not prevent a new round of the blame game starting.


Fuel and Energy Minister Yury Shafranik promised earlier Tuesday that the crisis would ease "in a day or two," but in a move reminiscent of the government's reaction to the so-called Black Tuesday ruble crash last month, he told a news conference that he would find and punish those responsible for the gasoline shortage.


Registering annoyance before the gas began to flow, Shafranik said: "We shall find the guilty ones and we shall find justice."


He placed the lion's share of blame on the Moscow Avtokombinat, which he said was responsible for supplying state-run gas stations in the capital.


But Avtokombinat officials maintained that they only deal with gas station repairs and that the city government buys and distributes all gasoline produced by the Moscow Refinery.


An official in the mayor's office, who asked not to be named, attributed the shortage to an Oct. 29 accident at the Moscow Refinery, which is the capital's major supplier.


"The accident led to a one-third reduction in gasoline supply to the city," he said. "But as of Monday the refinery was producing the usual amount, and in a couple of days the situation will improve."


Economists, however, said that the only culprit behind the shortages was Luzhkov, who has kept gas prices in Moscow artificially low.


"Luzhkov is trying to play a good father of the city," said Mstislav Afanasyev, deputy head of the governmental Center for Economic Reform. "He obviously wants to be re-elected and that's why he does not want to make any harsh steps."


The official in the mayor's office confirmed that the Moscow government delayed the gasoline price rise, because "it is not the best and most popular measure."


Afanasyev called the explanation of a refinery breakdown "nonsense," saying that if Moscow prices were reasonable, other refineries would have gladly sold their gasoline to Moscow.


He said gas dealers from outer regions had been rushing to Moscow to buy gasoline at lower prices, but that no one wanted to sell gas in Moscow for the same reason. "This is the ABCs of the market economy," he said.


Regions neighboring Moscow raised their gasoline prices last week. As of Nov. 1, a liter of 92-octane fuel cost 565 rubles in Yaroslavl and 495 rubles in St. Petersburg.But the official in the mayor's office said the dealers bought gas in Moscow because of a shortage in the regions, not because of the lower price.


The city official attributed the price hike to a 25 percent rise in prices for oil transportation on Oct. 20 and a general increase in wholesale oil prices.


Afanasyev said Moscow gasoline prices must be kept higher than the surrounding regions to avoid problems.


"Moscow is the place where most transport is concentrated, where money is located," he said. "Prices here must be the highest, otherwise the crisis will never end."