Russians, hand over your cash: oil and gas exports can't feed the country.

In the incomplete year of 2025, Russians have been handed numerous multi-year anti-records, directly impacting their daily lives. The unprecedented hike in utility rates has taken a heavy toll (literally), as have retail gasoline prices, which have risen by 12% since the beginning of the year, far exceeding the official inflation rate (4.3% from January to October).

In November, the Ministry of Finance had to record another record low: Russia's oil and gas revenues fell by 21% over the first ten months. The oil and gas sector drained 7 trillion 498 billion rubles from the state budget. In absolute terms, the country lost two trillion.

This is an unprecedented decline since the early 2020s. The year isn't over yet, but current figures are sufficient to predict a decline within the next five years. Given the current economic situation and current oil prices, exporters will add a modest 8.5 trillion rubles to the treasury by 2025.

This is what the dynamics of oil and gas revenues were:

A trillion rubles more, a trillion rubles less—what does it matter to me, the average citizen in Moscow, Saransk, or Vladivostok might think. And they would be wrong.

Economist Dmitry Prokofiev , author of the Telegram channel "Money and the Fox," points out that a structural shift has occurred in the relationship between the Kremlin and exporters.

The state, through its maneuvers, is gradually replacing unstable export duties with guaranteed taxes.

How could it be otherwise, when last year's "fat" figures had to be stretched to the limit? India and China, relying on cheap Russian oil, certainly helped. But trillions of rubles were pumped into the budget through key levies for the fuel and energy sector: the mineral extraction tax (MET), the tax on additional revenue from hydrocarbon extraction (NDD), customs duties, and other taxes.

The mineral extraction tax (MET) on oil accounted for up to 85% of all oil and gas revenues. And over the same period last year, the sector's main tax brought in 10.4 trillion rubles (an increase of 38% compared to the same period in 2023).

"The system has essentially learned to generate a stable income even under sanctions and price discounts," noted Dmitry Prokofiev.

But even the oil and gas cow has become increasingly difficult to milk, according to the Finance Ministry's latest report . This year, all key revenues from gas and oil producers have declined: the mineral extraction tax (MET) is down 25%, or 7.9 trillion rubles, and the additional profit tax (NDP) is down 21.5%, or 1.61 trillion rubles.

A rhetorical question: who will have to pay for all this? Since the fall, motorists have been paying at every gas station in the country. The Ministry of Finance plans to collect 1.5 trillion rubles from Russians starting next year by raising VAT by 2%.

This is despite the fact that the oil industry's situation in the third quarter of this year was favorable, as noted in a study by analysts at Euler Analytical Technologies.

Discounts on Russian crude oil grades compared to branded ones narrowed, and the average dollar exchange rate remained at the same level as last quarter. This combined effect made domestic oil exports more profitable. In rubles, our oil increased in price by 5-7% in the third quarter. Production and export profitability increased by 6% for Russian Urals.

The fuel market crisis hasn't hit the giants, either. Euler research shows that wholesale gasoline profitability in Russia nearly doubled in the third quarter, while diesel profitability increased by approximately 16%. Producing gasoline and diesel fuel has become more profitable not only for export but also for wholesale sales within Russia.

"The primary indicator of the profitability of oil product production and export is crack spreads. This is the difference between the price of oil and the price of the fuel produced from it.

In the third quarter, crack spreads widened, particularly for diesel, by 32%. Overall, according to our calculations, gasoline and diesel exports became more profitable by 6.8%, respectively.

But it's not all smooth sailing. The retail market, that is, gas stations, remains the weak link. Wholesale fuel prices have risen, while retail prices have changed little. As a result, gas stations are buying fuel at ever-higher prices and selling it at prices close to the old ones, resulting in ever-decreasing profits. "And in the third quarter, they even operated in the red," according to a quote from the Euler report.

Simply put, in the third quarter, the growth in oil industry revenues from exports and wholesale sales of petroleum products in Russia exceeded losses in the retail business.

The situation worsened in October. The Ministry of Energy extended the ban on petroleum product exports. The discount on Urals crude began to widen again, rising to $1.50 per barrel. On average, Russian crude oil fell by $11.50 against Brent, to $52 per barrel. Oil prices are under pressure from OPEC+ plans to increase production, as well as geopolitical instability and US President Trump's threat to wean India off Russian oil.

So, all that's left for Russians to do is pull out their expensive guns at gas stations, open their wallets wide at grocery stores, and remember to pay their utility bills on time, with rates indexed by 11.9% since July 1st, including a 10.3% increase for gas alone. Someone has to help these giant exporters survive.