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. Last Updated: 07/27/2016

Shortages May Prompt Gas Price Hikes

MTA gas station in northern Moscow selling its highest grade gas on Thursday at 20.70 rubles (83 cents) per liter.
Market participants on Thursday played down fears that a gasoline shortage in Moscow and the Moscow region could contribute to a sharp price rise at the pumps in the near future.

A source inside the Moscow Interregional Oil Union said Wednesday that local fuel reserves were down to three to four days' worth, Interfax reported.

A combination of short- and longer-term factors have led to wholesale prices rising close to market prices, the source said, meaning that companies could pass on the burden to drivers.

But union president Galina Zimkina on Thursday played down fears that the shortage would lead to price hikes.

"Of course the situation is difficult, but prices will not go up," Zimkina said. "So far we have withstood other across-the-board price rises and not raised fuel prices."

The current shortage has been put down to freak short-term production and delivery problems.

Over the past few weeks, three major refineries, in the Moscow, Ryazan and Nizhny Novgorod regions, have gone off line in unrelated incidents.

"I think that by the beginning of November, everything will be working as normal," Zimkina said, adding that a spike in fuel demand was natural at this time of year.

Analysts said the country's creaking infrastructure could mean that it would become a net importer of gasoline within the next few years.

Producing high-quality gasoline is a particular problem, TransCapital Bank analyst Nikolai Klyukin said.

Klyukin said rising food prices were also contributing to higher gasoline prices, because of a higher take-up of subsidized gasoline programs by agricultural producers.