Gas stations start selling Euro 5 gasoline: Will prices rise?

Author : Serhiy Sapegin

Source : 112 Ukraine

Since January 1, 2018, Ukraine has banned the turnover of gasoline and diesel fuel of the ecological class Euro 4. At Ukrainian gas stations, it is now possible to buy gasoline and diesel fuel only Euro 5, with a lower sulfur content. In wholesale, the difference in the price of fuel class Euro 4 and Euro 5 is about 5%. In practice, the toughening of the requirements for the quality of auto fuel in Ukraine will become a factor of price growth only in one case: if the state renews system quality checks
21:46, 24 January 2018

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112 Agency

Trade operations with a car fuel of the Euro 4 ecological class from January 1, 2018, are prohibited by the provisions of the Technical Regulations approved by the Resolution of the Cabinet of Ministers No. 927 from August 1, 2013. The technical regulation is developed in accordance with the requirements of Directive 98/70 / EC of the European Parliament and of the Council of October 13, 1998, as well as the Directive 2005/33 / EC of the European Parliament and the Council of July 6, 2005. According to the document, the turnover of gasoline and diesel fuel of the Euro 3 class ceased from January 1, 2016, Euro 4 - from January 1, 2017. The automotive fuel Euro 5 can be sold indefinitely.

The ecological classes of auto fuel are distinguished by the sulfur content. For diesel fuel and gasoline of the Euro 4 class, the content of up to 50 mg/kg of fuel is allowed, whereas for the Euro 5 - not more than 10 mg/kg. As is known, sulfur oxides contained in exhaust gases are one of the causes of an unpleasant smell. In addition, when they come into contact with the moist surface of the mucous membranes of the upper respiratory tract, they form harmful acids. Irritant effect on the mucous membranes is the cause of the development of chronic rhinitis, inflammation of the auditory meatus and Eustachian tube, chronic bronchitis. At high concentrations, sulfuric and sulfurous anhydrides cause irritation of eyes, and in rare cases even a loss of consciousness. In low concentrations, it can cause changes in the digestive organs, lead to functional disorders of a thyroid gland.

Domestic producers (Kremenchug and Shebelinsky refinery) switched to the production of the auto fuel of ecological class Euro 5 by the end of 2017. Thus, the share of fuel supplies of the Euro 4 on the market from our producers has significantly decreased, for gasoline, it has become almost zero. There were also no imports of gasoline of the Euro 4 class in 2016-2017, according to the observations of the experts. The share of imported supplies of diesel fuel Euro 4 class in 2016-2017 was about 10%. Diesel Euro 4 was sold mainly in wholesale - for the needs of agricultural, as well as state-owned enterprises. Research conducted by experts shows that the difference in wholesale prices of commercial offers for gasoline of ecological classes Euro 4 and Euro 5 was about 5%.

However, all this is true with respect to the law-abiding part of the market – official traders and does not concern the shadow traders (the quality and compliance of the ecological class of fuel they produce are not controlled by anyone). Now they have 20-25% of the market for high-octane gasoline and up to 10% for diesel fuel. A low price for handicraft production, as a rule, is achieved by mixing imported or Ukrainian gasoline (diesel fuel) with cheaper components. The number of the latter totals up to fifty names. To reduce costs, gas condensate is also used.

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They manage to make fuel, which can be 15% cheaper than high-quality factory gasoline or diesel. At current price level, they can earn up to 4 UAH per liter of gasoline A-92 and up to 6 UAH per A-95.

I note that in connection with the events that take place in Ukraine, and the legislative changes adopted by the parliament, the positions of the shadow businesses have been substantially superseded. It should be recognized that the share of the shadow business in the market is now much lower than in previous years. The majority of mini-refineries, which number reached almost a hundred and fifty years ago, is now idle.

The duty to check filling stations in Ukraine is entrusted to the State Procurement Service, which monitors compliance with the requirements of the legislation with regard to the protection of consumers' rights and the rules of trade in petroleum products. In 2017, the territorial bodies of the service checked 177 filling stations, establishing violations of 61% of gas stations. At the same time, from the proven 2.92 million liters of oil products, sales of only 82.31 thousand liters were suspended. 71 people were brought to administrative responsibility. They were fined just ... by 8.86 thousand UAH.

The conclusion is quite obvious: the tightening of fuel requirements and the raising of standards of its quality will not lead to an increase in prices. But a significant factor in the price increase may be the introduction of finally full-fledged control of the market by the state.

Also, I very much doubt that the transition to better fuel in Ukraine will help the environment. The reason is that our cars are 50% obsolete and cannot support the ecological characteristics of the fuel.

Among the main advantages, I would see the creation of a transparent full-fledged market where unfair competition will disappear, and traders will trade quality fuel and compete fairly, fighting for their buyer.

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