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. Last Updated: 07/27/2016

Gasoline Seen Capped Until 2008 Election

The country's major oil firms will keep a lid on gasoline rises this year despite rising wholesale prices in order to avoid irritating the Kremlin before the 2008 presidential elections, traders said Wednesday.

Wholesale gasoline prices rose 15 to 20 percent in April, when domestic crude prices surged 25 percent, traders said. But the trend is unlikely to carry over to the retail market during the politically sensitive pre-election period.

"We clearly remember last year's call [not to increase oil prices] by [Economic Development and Trade Minister German] Gref and his threat to introduce state control over the prices if they go up sharply," said a trader in a major oil company.

Last year, the government, concerned by the spike in local fuel prices, called on oil companies to curb price growth or face investigation for anti-competitive behavior. In 2006, gasoline prices rose by 11 percent in Russia.

Prices stopped rising at the end of last year and have barely changed for the last six months, standing at 17.72 rubles (69 cents) per liter in mid-April.

Big oil firms, which control the whole chain from production to retail stations, are in a better position than retailers to comply with self-imposed retail price limits, traders said.

"For big oil companies, retail is a social welfare project. They get their share at the wholesale market," said a regional retailer. "It would be even better for them if we go bankrupt and they will be able to buy us cheaply."