Why fuel price is breaking records in Ukraine?

Author : Olena Holubeva

Source : 112 Ukraine

The price of autogas in Ukraine has broken a record. Today, the average price tag on steles jumped to 0,6 USD / l - a record figure in the entire history of observations. There are no prerequisites for a decrease in the price of autogas, the growth will continue, experts are sure. In the next two weeks, the cost of fuel, which is considered to be social, can break through the psychological mark of 0,66 USD/l
23:10, 22 July 2021

Open source

Autogas in Ukraine has risen in price to record levels. Over the weekend (July 16-19), the average price of liquefied gas in gas station networks reached 0,59 USD / liter. Yesterday, July 20, the average price of LPG increased to 0,6 USD / l, which became a record figure in the entire history of observations. Today, after the average price increased to USD 0,6 / liter.

Why is auto gas getting more expensive?

Due to the lack of sufficient storage tanks and stabilization reserves, autogas is one of the most volatile types of automotive fuel in Ukraine. Changes in prices in foreign markets, on which our country depends as a major importer, are instantly reflected in the price tags of wholesale lots, and soon they will come down to filling steles. “Autogas rose in price amid a seasonal rise in prices, which occurs due to the traditional growth in demand in the summer months. In addition, there are other factors, in particular, an increase in prices for autogas on the adjacent Russian market, from where a significant amount of this type of fuel is imported. at sea," Serhiy Fedorenko, the director for commercial issues of JSC Ukrgazvydobuvannya, noted.

“In past years, in the summer, as a rule, gas supplied by sea became cheaper. Therefore, traders increased the volumes of its supplies, and this served as a factor in reducing prices. This summer, due to the rise in oil prices, this did not happen. and could not become an alternative to the increased prices in the Russian direction," A-95 expert Artem Kuyun told in a commentary.

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He added that the rise in prices for LPG in wholesale in Ukraine began in early July. Now we see that the upward wave has reached retail.

According to Fedorenko, the situation was influenced by interruptions in auto gas supplies from the Mozyr oil refinery in Belarus and interruptions in auto gas supplies to Rosneft. As you know, the Belarusian oil refinery went to a scheduled overhaul on June 1. The Swiss trader Proton, who worked with the resource of Rosneft, announced the suspension of activities after the security forces blocked the activities of the Glusco filling station network. The trader provided one fifth of the supplies of all diesel and autogas consumed in Ukraine.

For a long time, it was not possible to replace Proton and replenish the volume of shipments, which significantly increased the tension on the oil products market, which was already going through a difficult time: the cost of autogas at gas station stelae then for the first time exceeded UAH 16 / l, diesel fuel confidently approached the 1,1 USD / l, and gasoline A-95 confidently stepped over the mark of 1,1 USD / l.

The import of liquefied gas produced by Rosneft to Ukraine resumed only in June. Proton was replaced by Socar, which now trades in the resource of a Russian company.

As a result, there was a shortage. "We estimate its volume in the domestic market at the level of 15-20 thousand tons of the volume of monthly supplies," Fedorenko stated.

The deficit has become another catalyst for rising prices.

Related: US to lift oil sanctions on Iran

What will happen to the price of autogas?

“We expect that auto gas prices will remain at high levels in the next two weeks, until August 1. We do not exclude that they will break through the mark of 0,66 USD / l in retail, but then they should go down, if there are no interruptions in supplies from large importers ( Lukoil, Tengizchevroil, Rosneft and others)," Sergei Fedorenko said to

He noted that a factor that could prevent prices from falling could be the entry of a large consumer into the market during the harvesting campaign (rain is predicted for August, and elevators will be forced to dry large volumes of grain). Most dryers run on gas, including LPG.

On the other hand, the reduction in prices will be facilitated by the transition of consumers to gasoline, the prices for which remain stable, including due to state regulation.

Related: Ukraine’s government allows gas stations to raise prices for fuel, diesel fuel

Based on the quotes in the Mediterranean, which are published a month in advance, we can say with confidence that there will be no cheap autogas in July. The current high prices will last at least until the end of the month, says Artem Kuyun. Further, the situation will depend on oil prices. The analyst gave a more restrained forecast. "I think that from today's average price of 0,66 USD / l, the price may rise, and then the growth will stop. How long this situation will last, it is difficult to say. Again, it will depend on prices for oil," Kuyun said.

State regulation of auto gas prices

In order to stop the feverish rise in prices for automobile fuel, which, along with other factors, was facilitated by the withdrawal of Proton from the market, the authorities introduced state regulation of prices for gasoline and diesel fuel. Thanks to this step, the regulated A-95 costs 1,1 USD / l at Ukrainian gas stations, while its premium analogue A-95 + has already smoothly exceeded 1,4 USD / l.

At the same time, autogas remained out of regulation. It is not known whether the authorities are considering the possibility of extending it to this type of fuel now. If such a decision were made, it would be extremely illogical, experts say. The result of such a step could be the disappearance of autogas from Ukrainian gas stations.

Related: Rosneft resumes supply of diesel fuel to Ukraine

"The introduction of state regulation on certain types of gasoline and diesel fuel was intended to reduce the appetites of a number of gas stations that earned 0,15-0,2 USD / l for regulated types of fuel, and this was done. I do not think that in the current situation the authorities will decide to apply state regulation in the auto gas segment. Such a step would be illogical," says Fedorenko. "We do not expect the introduction of state regulation of prices for autogas. From my point of view, it would be as stupid as possible. Liquefied gas is a specific product. You can only earn money in it from sales volumes. If the already low margin is also limited, then filling networks they can simply withdraw it from sale," Artem Kuyun assumed.

Related: Maximum trade mark-up does not concern brand premium fuel

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