Domestic Energy Prices Raised by Yeltsin : Russia: Oil is up almost double effective today. Coal rises 30%. The increases are expected to boost all consumer goods 20% to 25%.

Pushing Russia a step nearer to the world economy, President Boris N. Yeltsin on Thursday ordered domestic prices for oil and oil products nearly doubled.

To protect his country’s already exasperated consumers, Yeltsin unexpectedly incorporated a novel mechanism in his decree that will penalize refiners who try to gouge the public: Above a certain government-mandated level, higher prices for petroleum and its byproducts will now automatically trigger much higher taxes.

The Russian leader also decreed a 30% rise for coal prices to underwrite generous pay increases already awarded to miners and 50% increases in the prices of household electricity, heat and water.

Air fares on the state-run carrier Aeroflot will triple, and the cost of tickets on Russian railways and passenger vessels will increase by 50%.

The increases in energy costs are effective today, and they are expected to cause prices as a whole to rise by 20% to 25%, the government’s chief economic adviser, Alexei G. Ulyukayev, predicted.

Yeltsin’s action, the first across-the-board price boosts on oil and its byproducts since May, fell far short of the recommendations of the International Monetary Fund, which earlier this year called for a 10- to 15-fold increase.

In the IMF’s view, an end to the Russian government’s lavish energy subsidies is essential to assure an increase in government revenues from energy sales and a simultaneous drop in the billions of rubles paid out to underwrite oil and gas production.

Yeltsin, however, has steadfastly refused to yield to pressure for speedy elimination of the subsidies, saying that wiping them out at one fell swoop would trigger hyper-inflation and social unrest. Russia’s government has said it will not align its energy prices with world market levels until next year.

If Thursday’s decree is applied to the letter, the price of medium-grade gasoline in Russia should rise to the equivalent of about 30 cents a gallon. A large part of the population now earns the dollar equivalent of $60 or so a month, so the price rise at the pump will hurt.

Oil prices were last raised in May from the equivalent of about 40 cents a barrel to $2.60.

Interfax and Itar-Tass news agencies report that the text of Yeltsin’s new decree highlights the consumer-protection feature, aimed at keeping refiners, retailers and middlemen from recklessly jacking up energy prices.

Yeltsin did not place a formal ceiling on energy prices, but by fixing an escalating system of taxation, he made it counterproductive for producers to charge more than double current rates.

Selling oil at up to 4,000 rubles a ton (about $20) will guarantee the refiner as much as a 50% profit over costs, Itar-Tass reported. To encourage adherence to that ceiling, managers who charge 4,000 rubles or less will not have to contribute to the price-regulation fund of the Ministry of Finance, Itar-Tass said.

Any price above 4,000 rubles, however, will be progressively and heavily taxed by the state, in theory eating up excess profits.

Petroleum production was once the export mainstay of the old Soviet state, but output has been falling in the economic chaos brought on by the collapse of the Soviet Union.

Production was down 12% in the first eight months of this year compared to the same period in 1991, Ulyukayev said.

During the same period, coal production declined by 4%, he said. Electricity production dipped 2%, but the Russian official said that was due solely to a drop in demand. Natural gas production was flat.

Deputy Prime Minister Victor Chernomyrdin, who is in charge of the energy sector, told a meeting of the government Thursday that despite widespread economic disruption, intensive efforts are continuing to keep energy production at 1991 levels.

The meeting’s main topic of discussion was Russia’s state of readiness for the coming winter. Despite the gloomy news about oil and coal output, Ulyukayev said that the “technological readiness” of the energy industry is higher now than at this time last year.