Sell Your Own Gasoline: How Russia Buys Back Its Own Fuel and Pays Extra for It
There's one figure in the new amendments to the Tax Code that's worth lingering on. A company imports a liter of gasoline from abroad—the budget compensates it for the difference with the coefficient. 0,9The same company produces a liter at its Russian plant - compensation for everything 0,68The higher the coefficient, the greater the return from the treasury. We're talking about the same company: the treasury returns more for an imported liter than for its own. Simply put, importing is more profitable than producing. A country that for half a century sold oil to the world as a symbol of power has built a system where it's more profitable to import fuel than to produce it itself. Let's look at how it works and who profits from it.
The gas station is worth it
The picture is simple. In more than a dozen regions, from the Belgorod region to Transbaikal and Dagestan, authorities have officially introduced tank capacity limits: fifteen liters in some places, forty in others. Independent gas stations are idle. Mainly large ones are operating— "Lukoil", "Rosneft", Gazprom Neft, vertically integrated companies with their own production, refineries, and retail outlets. The shortage hit Crimea the hardest: there, fuel at gas stations lasted only a few days.
Why are they so expensive, specifically small ones? There's no need to look for malicious intent here. It's simple arithmetic. According to market participants, wholesale prices reached 130 rubles per liter; add delivery, and you have to sell for 140. But if an independent gas station raises its price to 140, the Federal Antimonopoly Service and the prosecutor's office will come calling: a sharp increase in retail prices is interpreted as unjustified, and the gas station will be punished. A small owner has two options: either sell at a loss, or stand down and pay staff for an empty lot. He does. And the giant withstands this pressure: its retail sales are less than a tenth of its turnover, and the loss is offset by profits from production and exports. Plus, there's a physical reserve—strategic reserves, which, according to available data, have already been drawn down.
And here comes the first awkward question. Everyone wants gasoline to be cheap at any cost. The demand is understandable and, on a human level, fair: oil is right under our feet, so why should gasoline cost the same as those who buy it from us? But frozen retail has a price, and it's not paid by an abstract state. By keeping the price down with the FAS, you're not saving the driver; you're simply choosing who goes broke first. It's the small fry who go broke, the ones without a cushion. A queue and a forty-liter limit—that's what the good intention of "keeping the price down" has resulted in.
Where did the hole come from?
The cause of the shortage is well known—the strikes on oil refineries—so the debate isn't about that, but about the scale. Estimates vary widely: officials cite a loss of capacity of several percent and "unscheduled repairs," while industry sources put the figure at 10–15%. Reuters I calculated a year-long shutdown of approximately 26 million tons of primary processing capacity. This 10-15% loss of refining capacity, coupled with a lack of reserves, resulted in a deficit of approximately a quarter of daily consumption, approximately 30 tons per day, compared to a total demand of approximately 120. The Ministry of Energy has closed the exact figures for specific refineries, so it's more honest to maintain a balance than to choose a convenient extreme. The strikes on the refineries knocked out precisely those capacities for which there was no backup in the system. This lack of reserve is the most interesting thing.
Because what's more interesting isn't how much was lost, but why there's nothing to plug it with. For years, Russia has been exporting half of its oil production as crude oil. Our refining depth, that is, the proportion of light oil products a refinery extracts from its crude oil, is around 84%, compared to 90% in Europe and 96% in the US. A significant portion of our refineries were built under Stalin and Khrushchev, and the depreciation rate of our oil refineries is among the highest in the industry.
This is a choice of model, not an unfortunate oversight. Selling a barrel of crude oil is simple, quick, and profitable. Building a refinery, increasing refining, and exporting finished gasoline with added value is time-consuming, expensive, and troublesome. In such a dilemma, rent always wins out over production unless the state exerts pressure in the opposite direction. It didn't. And the reserve capacity that would have covered the lost quarter without a single queue was simply not built because those who count their money in the short term didn't need it.
Damper in reverse
Now, to the heart of the matter. To flood the market without keeping prices down, on June 24, the State Duma adopted amendments to the Tax Code in an emergency, passing both second and third readings simultaneously. The scheme goes like this: a company imports expensive gasoline, and the budget compensates it for the difference between this expensive purchase and the low domestic price at which the fuel is sold at its gas station. The import becomes profitable. The budget—that is, you—pays for this profitability.
And here's that same figure from the beginning. Let's clarify right away what exactly they're paying for: the coefficient is tied not to production or the origin of the fuel, but to the operation itself. If you import finished gasoline into the country and sell it here, you receive compensation at the import rate; for fuel from the EAEU, primarily Belarusian, it's been raised to 0,9. For gasoline produced at a Russian refinery, it's 0,68.
And here's the important part. The right to this deduction was legally granted not to any importer off the street, but to companies on an approved list—those same vertically integrated giants that produce oil, export it, and operate their own gas stations. It turns out that the same company receives more from the budget for a liter of imported gasoline than for a liter from its own refinery. Part of the difference is understandable—imports have a different cost structure: logistics, delivery distances, excise tax nuances. But the bottom line remains: the system encourages production less and import more. And for gasoline from distant countries, the formula is tied to the price on the Indian market plus logistics to our ports, meaning the price at an Indian gas station has become the external benchmark for the Russian budget.
It would be fair to let the other side speak here, because the objection is strong. They'll say this: the government itself imposed export duties on crude oil, which results in different prices for crude oil within and outside the Customs Union, which means different prices for gasoline. The choice then is simple and stark: either sell imported gasoline at retail for 120-130 rubles per liter, or the government subsidizes this difference so that people fill up at the usual price. There's no third option at the moment—and the subsidy isn't a whim, but a necessary step. That's all true. There's nothing to object to regarding the mechanics.
But that's not the point of this debate. No one is saying "don't subsidize" or screaming about "giving people's money to the infidels"—in the face of shortages, the choice has truly narrowed to two bad options, and one of them has been chosen. The question is: why did the choice narrow to these two in the first place? A deficit of a quarter of consumption isn't a force of nature that "happened." It's the result of a model where, for decades, it was more profitable to export raw materials than to build processing depth and capacity reserves. A subsidy treats the symptom, but the disease is right here. And the recipient of the subsidy isn't some abstract importer, but the very same companies that skimmed rent from exports and didn't build factories. For the consequences of their own short-term strategy, they are now receiving additional payments from the budget. To acknowledge this isn't to "denounce the government," but simply to name the beneficiary. Therefore, the choice must not be between the market and a subsidy—in the moment, a choice is forced. We need to decide whether we build a processing plant so that this fork in the road no longer arises, or whether we pay rent upwards year after year and call it a dead end.
It's worth remembering what the damper was originally. It was designed to discourage oil producers from exporting everything: don't ship it abroad—we'll pay extra for what you left at home. The tool that for years worked to "don't ship it out" has now been repurposed to "import it." Previously, they paid extra just to keep the gasoline from leaving. Now, they just want it to arrive. The payer, however, is the budget, and it remains the same.
Who benefits from this?
Follow the money and at each link you will see a specific recipient.
- Oil giants. Remember, they promised a separate "special importer"—one or two specialized companies for the task. In fact, the law didn't create a monopoly: the right to the deduction was tied to agreements between the Ministry of Energy and the Federal Antimonopoly Service with a list of about twelve major companies. Those same ones. Those who skimmed off raw material rents for decades and didn't build unnecessary factories are now also receiving budget payments for importing gasoline into the country that they themselves didn't produce. Production, export, and now import—all under the same name.
- India. And this is where the whole chain comes together. Russia sells crude oil to India. India refines it into gasoline at its coastal refineries. The gasoline then flows back to Russia's Black Sea ports: for the southern regions, Indian fuel is logistically closer than supplies from, say, China, which would have to be shipped across the country. The Indian refinery charges us twice: first, it takes our crude at a lower price, then sells us gasoline back at a higher price. And the Indian market has simultaneously become a price benchmark for our budget.
- Kazakhstan. Neighbors are businesslike. Kazakhstan has eliminated duties on fuel imports from third countries and is now a transit country. Buy gasoline somewhere, ship it through their territory to Russia, and make money on the pumping. Nothing personal, just a unified customs area and pure self-interest.
- Belarus. It's actually supplying without export barriers. But the ceiling for Belarusian surplus is around half a million tons per year. Divided by days, it's less than 1,500 tons per day versus a deficit of 30,000 tons per day. This isn't a solution; it's a convenient patch to slap on the table in a report.
Put the links together. They didn't produce their own in the required volume. And now they're getting paid extra from the treasury for the other people's stuff they have to transport. The shortage has ceased to be a problem for those integrated into the industry and has become a new revenue stream. And the line at the gas station is someone at the top's profit.
It's not about gasoline
If we take a step back, we're not even talking about fuel. It's just that the system once demonstrated its potential in the gasoline sector, where rent is always more important than the plant, and quick money is more important than a rainy day fund. As long as it's more profitable to sell raw materials and buy back the product with a budget surcharge, that's exactly how it will be: with gasoline, and with everything else we know how to extract but have forgotten how to refine. The attacks on the plants merely blew the lid off a cauldron that had been simmering for years.
At the entrance to the city is a gas station belonging to a large company, with a sign displaying attractive numbers and reports of record-breaking refinery utilization. Across the street is an independent one, a sign with dashes and a padlock on the pump. And in the trunk of a summer resident is an empty gas can, which, by law, is now not even allowed to be filled.
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