"Public No Longer Trusts Government"...Russia Rations Gasoline Amid 30% Price Surge and Emergency Crisis [Current Affairs Show]

Gasoline Shortage Due to Ukrainian Strikes on Refineries
International Oil Prices Rebound...Impact on Global Affairs

■ Broadcast: The Asia Business Daily's 'So Jongseop's Current Affairs Show'

■ Host: Political Specialist So Jongseop

■ Director: Producer Lee Miri

■ Guest: Reporter Lee Hyunwoo

Despite being the world's third-largest oil producer, Russia is experiencing a severe gasoline shortage and has begun rationing gasoline. The disruption in gasoline supply is attributed to significant damage to refineries and pipeline facilities caused by Ukrainian drone strikes. As the Russian government imposed a ban on gasoline and diesel exports until the end of the year, international oil prices, which had been on a downward trend, have started to rebound. If Russia's gasoline supply crisis continues for an extended period, it is expected to have a major impact not only on the war in Ukraine but also on the international situation.

Russia Imposes Gasoline Export Ban Until Year-End...Even Implements Rationing

On the 26th of last month (local time), a sign stating that there was no gasoline at the pump was posted at a major gas station in the Nizhny Novgorod region of Russia. Photo by Reuters Yonhap News

The gasoline shortage in Russia is reported to be extremely serious. Currently, gasoline prices are soaring by 30% each week, and long lines of vehicles are forming at gas stations nationwide as people try to fill up in advance. The sharp decrease in gasoline and diesel supply is primarily attributed to Ukrainian forces launching concentrated drone attacks on refineries and pipelines across Russia, targeting both front-line and rear areas.

In particular, the Crimean Peninsula, which has been a major target of Ukrainian drone attacks, is reported to have more than half of its gas stations closed. With fuel supplies depleted, local governments have begun limiting the amount of gasoline sold per person, and in some regions, rationing has been implemented, leading to strong backlash from local residents.

The Russian government officially acknowledged the gasoline shortage crisis at the beginning of last month. The situation, which has persisted for nearly two months, continues to worsen rather than improve, fueling public discontent. Last month, the Russian government announced that it would resolve the gasoline supply shortage by the end of September and asked the public to be patient. However, as the situation deteriorated further, the public has lost faith in the government's assurances.

The Russian government initially appeared flustered when the supply problem, which started in one or two regions, spread nationwide. In an unusual move, it announced that the ban on gasoline and diesel exports would remain in effect until the end of the year, resulting in a ban lasting more than four months.

Russia ranks third in the world in oil production after the United States and Saudi Arabia, and its refining capacity is also third after China and the United States. Gasoline and diesel exports had remained relatively unrestricted despite sanctions against Russia, allowing continuous exports to various countries. However, with many refineries now under attack, it has become difficult for Russia to maintain its oil export revenues, which have been funding most of its war expenditures. With the export ban in place until the end of the year, securing war funds is expected to become increasingly challenging, and some analysts predict that Russia's large-scale offensives in the Ukraine war may lose momentum as a result.

Russian Government: "Gasoline Shortage Is a Supply Issue"...Only Promises Imminent Resolution

AFP Yonhap News

Russian authorities attribute the current gasoline supply crisis solely to temporary supply issues. They claim that the problem is not due to Ukrainian drone attacks but rather to market manipulation by middlemen in the distribution process or the accumulation of temporary supply disruptions. However, the Russian public is increasingly skeptical of these explanations.

Most of Russia's refineries and gasoline suppliers are state-owned enterprises. By blaming middlemen in the distribution process, the government is effectively admitting to siphoning off fuel, which amounts to acknowledging its own wrongdoing. Nevertheless, the reason the government is reluctant to attribute the crisis to Ukrainian drone attacks is reportedly due to President Vladimir Putin's position.

President Vladimir Putin recently returned from a meeting with U.S. President Donald Trump in Alaska and declared that the war in Ukraine was over and that Russia had won. Domestically, there is an atmosphere that the war is about to end, and the government has promoted the idea that it has secured all occupied territories and that Russia will reap enormous benefits. In this context, it is extremely difficult for the government to admit that Ukrainian drones are still attacking targets across Russia, especially refineries and pipelines, causing a gasoline crisis.

As the government has failed to make a candid official announcement or present effective countermeasures, public dissatisfaction is growing, with many Russians believing the government is continuing to deceive them. Although President Putin has made bold proclamations, the reality is different, and the government is unable to acknowledge this publicly.

International Oil Prices on the Rise Again...Expected Impact on Global Affairs

Reuters Yonhap News

The gasoline crisis in Russia is also affecting international oil prices. As Russia is the third-largest country in both oil production and refining, the gasoline crisis has caused a sharp rise in global oil prices. The price of West Texas Intermediate (WTI) crude oil, which had fallen to the low $60 range by mid-last month, has surged back to around $65, and there are concerns that it may rise to the $70 level in the near future.

While the United States and China are the top two countries in oil refining, most of the fuel produced in their refineries is consumed domestically. In contrast, Russia exports more refined oil than it uses domestically, so a ban on Russian oil exports has a significant impact on other countries. If Russia's gasoline shortage persists and the export ban is extended further, it is feared that the global oil market will be affected even more. For a while, international oil prices had been on a downward trend as the Ukraine war seemed to be moving toward a ceasefire and peaceful agreements were expected in the Middle East. However, with this crisis, concerns are mounting and a rebound in prices is anticipated.

This gasoline crisis in Russia is also reported to have influenced President Trump's statements. Recently, President Trump described Russia as a "paper tiger" and made unusually strong remarks. Analysts suggest that these comments are intended to pressure Russia into making progress in stalled ceasefire negotiations or to strengthen support for Ukraine, anticipating a prolonged war.

Following these remarks, the U.S. government announced that it would consider providing Tomahawk cruise missiles to Ukraine. With a range of over 2,000 kilometers, Tomahawk missiles can strike both the front and rear areas of Russia, posing a significant threat to the country.

However, since President Trump frequently changes his statements and policies, it remains uncertain how long this stance will last. Nevertheless, there is growing speculation that the ceasefire in the Ukraine war has all but collapsed. As the stalemate in the European theater is expected to persist, some predict that the impact will also extend to Northeast Asia.

With the Asia-Pacific Economic Cooperation (APEC) summit scheduled to be held in Gyeongju in October, this impact is drawing even more attention. At this summit, where President Trump and Chinese President Xi Jinping are expected to meet, the war in Ukraine is likely to be one of the main topics of discussion. China continues to play a key economic role for Russia, serving as a major supporter by importing Russian oil and exporting strategic resources that are blocked by sanctions. The U.S. government is expected to propose various incentives or apply pressure on China to secure a stronger agreement than before.