In recent weeks, after Ukrainian drones attacked refineries and other oil infrastructures, gas stations in parts of Russia have been cut off, drivers have set up long lines, and officials have had to impose limits or stop sales altogether.
The wholesale price of A-95 gasoline (with the highest octane rating) on the St. Petersburg International Mercantile Exchange surged to a record high last week, about 50% higher than in January, as Russians took their last long vacation of summer.
Russian media reported that consumers in many regions of the Far East and the Crimean Peninsula are facing fuel shortages. The Crimean Peninsula was illegally annexed from Ukraine by Moscow in 2014.
Media in the coastal border region bordering North Korea that gas stations in the region were in a long line, with gasoline prices as high as 78 rubles per liter (about $3.58 per gallon), while the average monthly wage of residents in the region was about $1,200. Reporters from local news media Primpress found other drivers trying to sell gasoline online at a price of 220 rubles per liter (about $10.12 per gallon).
A shortage of low-octane A-92 gasoline forced officials to stop public sales outright on Monday in the Kuril district of the Kuril Islands in northern Japan. In the popular resort of Crimea, some companies only sell fuel to holders of coupons or special cards.
Normal price increases intensify this year
Russia is not unfamiliar to the rise in gasoline prices at the end of the summer, but this year’s shortages have been aggravated by the attacks on refineries in Ukraine during the three-and-a-half-year war. Larger, more concentrated attacks have caused greater damage and hindered production, all in line with peak demand.
Ukraine has also previously targeted energy infrastructure, but recent attacks have been more successful, with more drones targeting more concentrated facilities.
Sergey Vakulenko, a senior fellow at the Carnegie Center for Russia Eurasia, told The Associated Press: "The Ukrainians are attacking an arc-shaped refinery area that stretches from Ryazan, south of Moscow, to Volgograd. People pass through this area when they drive to the Black Sea [resort]. Most oil extraction operations take place here.
And there is also a fairly dense population."According to media reports, between August 2 and August 24, Ukraine attacked oil infrastructure at least 12 times.
The attacks damaged many refineries but did not completely destroy them, Mr. Vakurenko said, adding that most facilities were highly fireproof.
But Gary Peach, an oil market analyst at Energy Intelligence, said the attacks would slow down refineries’ production activities, which would reduce the daily consumption of approximately 200,000 to 250,000 barrels of crude oil used to produce diesel, gasoline or other products.
"It's enough for their gasoline industry to feel some of the shock, especially during the peak consumption period in the summer," he told The Associated Press. In the first 19 days of August, gasoline production fell 8.6% year-on-year and diesel production fell 10.3%.
Other war-related issues have also caused consumers to suffer even more.Vakuelenko said the repeated U.S. drone attacks disrupted Russia’s transportation networks, especially air traffic, and led to more people choosing to drive and travel, increasing demand for gasoline.
He also said inflation has also reduced profits for suppliers who typically buy gasoline at the beginning of the year and sell it during the higher summer months, and many entrepreneurs have simply decided not to buy gasoline this year.
A single issue has not caused lasting or widespread chaos in Russia. But these issues add up to turn expected annual price fluctuations into a problem for the government.
In order to mitigate the shortage, Russia suspended gasoline exports. Officials announced on Wednesday that gasoline exports would be completely banned by September 30 and that traders and intermediaries would be partially banned from exporting gasoline by October 31. According to Russian media reports, the government has also convened two meetings of oil company managers this month to discuss gasoline shortages.
Moscow has mostly no shortages
Mr. Peach said that while officials appeared concerned, the shortages were "not serious for the system".
Until now, the shortages remained limited to certain regions — the Far East and Crimea — because these areas typically offer less refineries and have greater demand for transportation.
The reason why Moscow has not been affected by the recent surge in gasoline prices is because there is ample supply of large refineries in Yaroslavl and Nizhny Novgorod, two cities only a few hours 'drive from Moscow. There is also an oil refinery in Moscow.
Experts say that even in some more vulnerable areas, Russia will not face the risk of falling into immediate shutdowns. While private car drivers may feel some inconvenience at the gas station, most buses and trucks use diesel, while Russia's diesel supply is sufficient.
Annual diesel production is "more than double demand," Mr. Vakulenko wrote in a recent commentary.
But that doesn’t mean things won’t get worse.Russian refineries not only produce gasoline for the domestic market, but also produce diesel and other products for export – under severe Western sanctions, exports are a major source of revenue for Russia.
Industry observers say the target of the Ukrainian drone is key oil refining equipment, including the evaporation tower. The evaporation tower separates crude oil into gasoline, diesel, marine fuel and other products. If equipment is damaged, repair or replacement must be carried out in order for the refinery to operate properly. If imported parts are needed, repair may be difficult.
The gasoline crisis is expected to ease by the end of September as demand falls and annual summer maintenance at many refineries ends.
However, the crisis highlighted a weakness that exists within Russia and could be further exploited with the development of drone warfare.