Bloomberg reported from Moscow yesterday:
Rising oil prices have been a relief for Russia’s finances, but they’ve given the Kremlin a headache in the form of higher gasoline prices, hitting already-struggling consumers and fueling inflation.
Struggling to control the increases, the government summoned oil executives for a meeting on the issue late Wednesday. In the face of threats from top officials to limit lucrative exports… the industry executives agreed to keep wholesale prices from rising any further and boost local supplies.
Price ceilings and quantity floors: welcome to central planning lite. Had the “top officials” actually limited exports via quotas or licenses, gasoline prices in the domestic market would still be determined by supply and demand. But the oil industry would rather accept regulated prices and volumes – the less painful option, apparently. What will consumers get out of this agreement? With price controls in place, the specter of gas station lines is always close by, ready to materialize.