Who Benefits from the Gasoline Crisis
A total of 290,500 tons of oil and gas condensate was extracted in Ukraine, July 1-28, Interfax Ukraine was told by the Ministry of Power Industry. Over the same period Ukraine's oil refineries were supplied 187,400 tons of domestic, 704,000 tons of Russian oil, and 10,000 tons of oil from Kazakhstan.
Even a superficial analysis of the situation and the fact that the gasoline crisis enveloped not only Ukraine, but also Belarus and separate Russian regions are evidence — to me personally — of a conspiracy made by Russia's oil- extracting and selling magnates, operating in Russia, Belarus, and Ukraine. The purpose is obvious: taking advantage of the situation and amassing guaranteed excess profits, sharing them with the powers that be, of course. In this sense, the existing regime benefits from such situations — politically, by showing their resolute approach in combating «cunning capitalist business,» and materially, by receiving hard cash through government-controlled banks and business structures. And it does not matter what kind of money — through bribes given to bureaucrats at all levels or by way of additional subsidies, for example to resolve social problems on the eve of presidential elections in Ukraine or parliamentary ones in Russia. Eventually, one and all within the bureaucratic machine will receive something to feather their nests.
First, because the harvest campaign is still in progress, complicated by the drought befalling Ukraine and Russia. Media reports make it clear that, because of exceptionally dry weather, a mere 15-18 centners (e.g., of wheat) per hectare are being harvested even on the most fertile soils. Instead of the predicted 30-35 c/ha. Meaning that the farmers may suffer devastating losses and to somehow make up for them they will pay any fuel prices. Boosting these prices takes fuel shortages. Hence the crisis was engineered by oil producers, but mainly by dealers selling gasoline and diesel fuel.
Second, bad crops may result in winter food supply problems. In addition, everybody knows that Ukraine plans to pay Russia for energy supplies with goods, particularly foodstuffs. Premier Pustovoitenko agreed with Vagit Alikperov, head of Russia's Lukoil, on food and other commodity supplies. To guarantee farming deliveries, fuel supplies against future crops proves the best — and well tried — arrangement.
Fuel dealers use the same tactic, the only difference being that Ukraine will give Russia its grain and the dealers, being in control of sizable food reserves, will also control food prices. Hence the people's spontaneous expectation of cost jumps. This has happened more than once.
Government-dealer blackmail of the peasantry is also stimulated by Russia's demand that the costs of Ukrainian goods supplied on account of Ukraine's arrears be lowered by 20-25%. If Ukraine agrees it will have to increase these supplies. Considering this year's crop failures, such blackmail proves the most reliable method.
Another thing is more amazing, however. Complete understanding between the regime, supposedly concerned about the gasoline crisis, and all those stimulating it. The reason is purely political: the need to solve the problem of arrears on social payments before the elections. This calls for huge spending. Where to get the money?
And again a simple speculative vehicle is set in motion. NBU head Viktor Yushchenko hinted at «certain banking structures» being interested in the lowering hryvnia rate, pointing at unjustifiably low hryvnia-dollar exchange rates while buying greenbacks en masse. Correct, except that Mr. Yushchenko used the word unjustifiably. This tactic was very much justifiable from the standpoint of those behind it. Buying for a rise and operating for a fall, the authorities and government-controlled banks accumulate both hryvnias and dollars. Greenbacks are then exchanged for hryvnias at overstated rates, meaning there will be a lot of national currency to pay debts. And no one worries about the fact that this will result in price jumps, and that the amount of indebtedness will not be adjusted to the dollar rate. The main thing is to do away with arrears and get a chance to win the presidential race. Likewise, no one is concerned about people earning less than they did last year, yet something is better than nothing.
A total of 290,500 tons of oil and gas condensate was extracted in Ukraine, July 1-28, Interfax Ukraine was told by the Ministry of Power Industry. Over the same period Ukraine's oil refineries were supplied 187,400 tons of domestic, 704,000 tons of Russian oil, and 10,000 tons of oil from Kazakhstan.
Even a superficial analysis of the situation and the fact that the gasoline crisis enveloped not only Ukraine, but also Belarus and separate Russian regions are evidence — to me personally — of a conspiracy made by Russia's oil- extracting and selling magnates, operating in Russia, Belarus, and Ukraine. The purpose is obvious: taking advantage of the situation and amassing guaranteed excess profits, sharing them with the powers that be, of course. In this sense, the existing regime benefits from such situations — politically, by showing their resolute approach in combating «cunning capitalist business,» and materially, by receiving hard cash through government-controlled banks and business structures. And it does not matter what kind of money — through bribes given to bureaucrats at all levels or by way of additional subsidies, for example to resolve social problems on the eve of presidential elections in Ukraine or parliamentary ones in Russia. Eventually, one and all within the bureaucratic machine will receive something to feather their nests.
First, because the harvest campaign is still in progress, complicated by the drought befalling Ukraine and Russia. Media reports make it clear that, because of exceptionally dry weather, a mere 15-18 centners (e.g., of wheat) per hectare are being harvested even on the most fertile soils. Instead of the predicted 30-35 c/ha. Meaning that the farmers may suffer devastating losses and to somehow make up for them they will pay any fuel prices. Boosting these prices takes fuel shortages. Hence the crisis was engineered by oil producers, but mainly by dealers selling gasoline and diesel fuel.
Second, bad crops may result in winter food supply problems. In addition, everybody knows that Ukraine plans to pay Russia for energy supplies with goods, particularly foodstuffs. Premier Pustovoitenko agreed with Vagit Alikperov, head of Russia's Lukoil, on food and other commodity supplies. To guarantee farming deliveries, fuel supplies against future crops proves the best — and well tried — arrangement.
Fuel dealers use the same tactic, the only difference being that Ukraine will give Russia its grain and the dealers, being in control of sizable food reserves, will also control food prices. Hence the people's spontaneous expectation of cost jumps. This has happened more than once.
Government-dealer blackmail of the peasantry is also stimulated by Russia's demand that the costs of Ukrainian goods supplied on account of Ukraine's arrears be lowered by 20-25%. If Ukraine agrees it will have to increase these supplies. Considering this year's crop failures, such blackmail proves the most reliable method.
Another thing is more amazing, however. Complete understanding between the regime, supposedly concerned about the gasoline crisis, and all those stimulating it. The reason is purely political: the need to solve the problem of arrears on social payments before the elections. This calls for huge spending. Where to get the money?
And again a simple speculative vehicle is set in motion. NBU head Viktor Yushchenko hinted at «certain banking structures» being interested in the lowering hryvnia rate, pointing at unjustifiably low hryvnia-dollar exchange rates while buying greenbacks en masse. Correct, except that Mr. Yushchenko used the word unjustifiably. This tactic was very much justifiable from the standpoint of those behind it. Buying for a rise and operating for a fall, the authorities and government-controlled banks accumulate both hryvnias and dollars. Greenbacks are then exchanged for hryvnias at overstated rates, meaning there will be a lot of national currency to pay debts. And no one worries about the fact that this will result in price jumps, and that the amount of indebtedness will not be adjusted to the dollar rate. The main thing is to do away with arrears and get a chance to win the presidential race. Likewise, no one is concerned about people earning less than they did last year, yet something is better than nothing.
Newspaper output №:
№31, (1999)Section
Economy
