Last week, car owners all across Russia took to the streets to protest against fuel prices that have almost doubled in the last year. The event was organized by the Union of Transport Workers and public organizations of car owners, who estimated that about 500,000 people took part in the event.
Convoys carrying posters drove through cities and pickets were staged near administrative buildings to put their demands to government officials. The protesters were demanding that gasoline prices should not exceed 11 rubles (around 40 cents) a liter, that the fuel market should be controlled by the government and not the oil companies, and that the state should sponsor the development and market introduction of environmentally friendly fuel. Motorists and transport workers are convinced that if the government controlled the market, fuel companies would not set such high prices, while fuel quality would be higher. Viktor Makhnachev, a union leader, told Mayak radio: "If our calls remain unheard, we will be forced to resort to decisive action. There is no other country in the world where there could be such confusion with fuel prices. Prices are subject to state regulation everywhere."
The protesters wanted the president and the government to lower fuel prices to the 2002 level. Over the last two years, transport workers and car owners say the price of fuel has grown by 88%. In 2004 alone, the price of gasoline went up by 40%, and diesel fuel by 56%. A liter of gasoline in Russia costs on average the same as in the United States, at times even more, while a ton of aircraft fuel costs up to $55 more than in Europe.
The problem with gasoline and other oil products, such as diesel and aircraft fuel, the prices for which already exceed those in Europe, is that demand for these goods remains constant. Car owners and transportation companies will continue to buy fuel until they wake up one morning and find they have no money. Of course, there is a certain price limit above which fuel consumption decreases drastically and there is another above which consumption simply stops, but obviously Russian fuel prices have not reached these levels yet. And so car owners keep buying gasoline, they get into their cars and drive to the protest, instead of leaving the car at home and walking. They spend hours in traffic jams, inhaling the fumes of low quality fuel, arguing that it's their way to save money. After all, municipal transportation has become more expensive, up to 40% more expensive in some cases, in just over a matter of months.
What happens next is that all of these unhappy people go and picket the government demanding that the Kremlin take the matter into its own hands. Moreover, some say the Kremlin was to blame from the very beginning. The protesters demand mandatory reductions in prices and the establishment of a government body to oversee this sector.
Some would compare this to socialism. That aside, such demands are simply very anti-free market. It is completely understandable why President Putin and his cabinet have been hesitant to engage in any kind of government regulation in this sector. Russia has been criticized enough for lacking a free market economy. For a long time, government-controlled natural gas and electricity prices were a stumbling block in Russia's negotiations on accession to the World Trade Organization. Introducing government control in the sphere of fuel prices would be tantamount to whipping up a storm of criticism and for this reason the government limited itself to accusing the oil companies of monopolizing the market and of asking some more conscientious oil oligarchs, such as LUKoil's Vagit Alekperov, "to do something" about high gasoline prices.
Now the government, already shaken by the benefits mishap, is beginning to sound more populist. Deputy Prime Minister Alexander Zhukov, who was once considered a liberal, spoke to the protesters, agreeing with them on the need for a special controlling body. Mr. Zhukov also spoke of a conspiracy among oil producers, but said that it was very hard to prove and even harder to punish. In the end, the protesters may get what they asked for and the authorities will crack down on the oil producers and traders, bringing prices down, at least to some extent.
The interesting aspect to this story is not even the government's reaction to the protest. What is interesting is the protest itself. It is perfectly clear that the government has nothing to do with the price hikes. It is obvious that the oil producing companies and the traders, many of whom are subsidiaries of the former, are responsible. And logically speaking these companies are the ones that have to be addressed with all issues, save, perhaps, the development of the environmentally friendly fuel. What could the protesters possibly do to make the oil monopolies notice them? Simple - they could have left their cars at home. I believe that had the same 500,000 protesters that took their cars to the streets stayed at home or took the subway for a day, or two, or, maximum, a week it would have sent a much clearer signal to the oil producers than all the slogans and stickers and demands that echoed across Russia on Thursday.
The protest actions are actually very symptomatic, because they show that Russian citizens still view the federal government as an omnipotent creature responsible for everything. When regional officials pocket the money that comes from the federal budget for doctors' and teachers' salaries, people do not even think about blaming the local authorities - they go straight for the federal government. When regional governors and their government fail to prepare for the winter season or do not transfer the money to Russia's power monopoly UES, the federal government and the UES are blamed, not the local officials. When oil companies keep raising gasoline prices, the people once again go to protest against the government and not the oil companies. However sad it may be to admit, all of this shows that for all of its faults, indecisiveness and corruption, the Russian government is much more liberal and devoted to the concept of a free market than the Russian people.
