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11 Jul, 2008 16:22

Fuel prices threaten Russia’s car culture

Despite having more oil than almost anybody else, Russians still have to dig deep when paying for fuel at the pumps.

In Soviet times, owning a car was a luxury few could afford. Today, it’s not unusual for a family to have two. But the high price of petrol is once again turning the motorcar into a luxury – and not just in Russia.

Drivers across the world simply cannot keep up with the surge in fuel prices.

Truck drivers have gone on strike in several countries while ordinary drivers have staged protests. But the prices just keep on rising.

Russia is an oil-producing country, the largest in the world after Saudi Arabia.

Why, then, does it suffer from the same problem?

It seems the government has been asking itself this question too because measures that might help drivers could be just around the corner.

During a meeting on reforms in the energy sector, Prime Minister Vladimir Putin said taxes should be cut and more done to support independent producers. It is thought that if oil producers didn’t have to pay so much tax, they could cut the cost of petrol and diesel to consumers.

“It is necessary to build new refineries including refineries that are independent  of large oil producers,” Putin said.

This is a message the country's independent oil producers have been waiting for.

“Small oil producers almost never have refineries. But if an independent refinery were to be created, it would guarantee security for them – as there would always be distribution for the domestic market, not just for export needs,” Elena Korzun from the Association of Small and Medium Oil and Gas Producers says.

The measures being talked about aren’t just expected to affect fuel prices. Analysts believe serious reforms of the entire energy sector are in the works. However, any changes will take months to be implemented.