The President has signed amendments to the Tax Code aimed at supporting the domestic fuel market. The document permits the use of straight-run gasoline – a product of early oil refining with a low octane number – for blending with other components to more quickly produce finished high-octane gasoline. In addition, this scheme is now subject to excise tax and the damper mechanism.
The main goal of the changes is to promptly increase the supply of gasoline to the domestic market amidst the fuel crisis and curb further price increases at gas stations.
How the New Scheme Will Work
Traditional production of high-octane gasoline requires complex catalytic processing. The new approach allows for faster fuel production by blending straight-run gasoline with octane-boosting components. While this method is not ideal, in conditions of scarcity, it allows for a quicker increase in production volumes.
Why Tax Rules Were Changed
Previously, uncertainty arose not only with technology but also with taxation. Straight-run gasoline was often exported or used in petrochemistry, and blending with other components had no clear tax status. Because of this, oil depots preferred not to use such a scheme.
Now, blending is officially recognized as gasoline production. This means the accrual of excise tax, the ability to apply tax deductions, and receive the damper – a mechanism for compensating oil companies for supplying fuel to the domestic market at a price below the export price.
The state simultaneously aims to increase gasoline production and bring this process into a fully legal and controlled legal framework.
Will This Affect Fuel Quality?
Blending itself does not mean a deterioration in gasoline quality. High-octane components and various additives have long been used in fuel production, and the final result depends on adherence to the formulation and quality control.
Nevertheless, when there is a need to quickly increase production volumes, the risk of compromising on quality increases. Therefore, the law provides for confirmation of processing and control through tax documentation to prevent the use of anti-crisis measures as a loophole for unscrupulous market participants.
What Will Happen to Prices?
One should not expect a significant reduction in gasoline prices after the law is adopted. If the new scheme proves effective, it will help increase fuel supply and avoid a sharper price increase. The main goal of the document is not to make gasoline cheaper, but to reduce the risk of its shortage and further price increases during periods of high demand.
This is the key meaning of the changes: blending is considered not as a more advanced production technology, but as a way to quickly replenish the shortage of gasoline in the market during a crisis.