Russia bans fuel exports

Remember that pesky fuel shortage in Russia I told you about yesterday? The government has been quick to react. Today, they announced that they would halt ALL gasoline exports for at least one month starting May 1.

Russia is the world’s largest oil producer. But as Putin stepped in earlier this year with a populist move to keep gasoline prices superficially low, oil producers forewent the domestic market and decided they’d be better off keeping profits high by exporting their product abroad. That led to shortages in several Siberian regions and, ironically, to price rises too. The panic was starting to spread to Moscow.

What does the export ban mean for gas prices globally? Not much. Russia remains mainly an exporter of crude, rather than refined oil products. According to Sergei Kudryashov, the deputy energy minister, Russia exported 3 million tons of oil products in the first four months of 2011 (that’s the ENTIRE amount exported the 12 months of last year). Last year, Russian oil output reached a post-Soviet record, with the country producing 10.1 million barrels per day (505.193 million tons). Those who will suffer most will be the ex-Soviet neighbors who remain Russia's biggest customers. Yet Russia's export of oil products to former Soviet countries aleady fell last year to 9.987 million tons, according to the Federal Customs Service, a 33 percent drop, while its export to non-Soviet countries rose by 9.6 percent.

What does the ban mean for Russia? The panic will likely ease and Siberian gas stations will be refilled. But officials say they still expect prices to rise, and that will not leave people happy.