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Why Are High Gasoline Prices Detrimental to the Russian Economy?

Dmitry S. Gordeev – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration; Senior Researcher of the Institute of International Economics and Finance, Russian Foreign Trade Academy, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Andrey V. Polbin – Head of Mathematical Modelling of Economic Processes Department of the Russian Presidential Academy of National Economy and Public Administration; Deputy Head of Mathematical Modelling of Economic Processes International Department of the Gaidar Institute, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Damper pricing in the Russian petroleum product market prevents gasoline and other fuels from falling when oil prices fall, which destroys the incentives for economic agents to fill natural storage facilities with fuel, thereby destabilizing the domestic oil product market. In the conditions of a decrease in the purchasing power of the population and a deep economic recession, the abolition of damper pricing and lower excise rates could stimulate business activity, increase the competitiveness of domestic industries, and reduce social tension.

Key words: oil prices, petroleum prices, oil storages, damper pricing, excise taxes on gasoline.