What the Russian government didn't learn from the Soviet era
The current gasoline shortage in Russia is reminiscent of food shortages during the Soviet era
A board displays fuel prices near the Rosneft Achinsk oil refinery plant, one of the biggest Siberian fuel suppliers, in the town of Achinsk, some 188 km (117 miles) west of Krasnoyarsk, April 28, 2011. Russia's Energy Ministry said on Monday producers will stop exporting gasoline in May to help Russia cope with the fuel shortage on domestic markets, Deputy Minister Sergei Kudryashov said, Interfax reported. How does one of the biggest oil producers have a gasoline shortage?
Ilya Naymushin / Reuters
Russia, the world's biggest oil producer and the second biggest oil exporter (after Saudi Arabia), is facing increasing gasoline shortages. But how could the world's biggest oil producer have a shortage of gasoline? Because the Russian government in an effort to satisfy voters who don't want to pay higher gasoline prices has created price controls that makes it much more profitable to export oil and gasoline than to sell it in Russia.
This is very similar to the widespread shortages of food and other consumer goods caused by artificially low prices during the time when Russia was part of the Soviet Union. Apparently, the Putin regime hasn't learned the correct lessons from this era.
If they wanted to help gasoline buyers, it would have by the way been much smarter to instead use some of the increasing revenue from oil exports to cut or abolish the excise tax on gasoline. If they had done that, there wouldn't have been any shortages even as prices remained low.
Add/view comments on this post.
--------------------------
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.