Most oil products’ average retail prices went down in Ukraine last week. UPECO expert findings point to A-95 registering the lowest average UAH 7.81 per liter Friday, 12 kopiikas less than the previous day. Other grades also sold cheaper, even if on a smaller scale: between 2 and 5 kopiikas.
Experts predict that this decline will be short-lived, and that before long oil products’ retail prices will be on an upward curve again, increasing by UAH 0.25, due to the law increasing the fuel excise tax. It reads that this duty on gasoline will be up by 20 percent — from 110 to 132 Euros per ton.
Not so long ago, the Verkhovna Rada passed Bill #6337, on changes to a number of laws on taxes, as well as on an increase in the excise tax on alcoholic beverages, beer, cigarettes, and oil products. This bill was signed by the president of Ukraine and carried by the official periodical Holos Ukrainy.
There are also more optimistic views on the effects of the increased tax burden on fuel prices. According to Interfax Ukraine, oil market moguls believe the 20-percent gasoline excise tax increase will have no effect on oil products’ prices.
“In view of the world market situation, traders could soon lower the prices by 10-15 kopiikas, yet in view of this law, these prices will remain unchanged. The possible increase will be leveled out by the world market price decrease,” says Leonid Kosianchuk, president, Ukrainian Oil Market Operators’ Association.
Ranking bureaucrats promise that gasoline prices will stop increasing after reaching a certain figure. A recent meeting of the Ukrainian Fuel and Energy Ministry’s oil market export analysis task force resolved to reinstate the previously economically substantiated fuel prices. According to the task force’s experts, the price of A-95 can’t be higher than UAH 8.10 per liter.
However, the fuel price-quality ratio remains a dilemma in Ukraine. Every second liter of gasoline sold at domestic filling stations is defective. Serhii Kuiun, CEO, A-92 Consulting Group Ltd., told a press conference recently: “Today the consumer is left to face the problem of very low quality fuel sold on the market. Indirect estimates point to some 50 percent of this gasoline falling short of Ukraine’s lax official standards. Of this, 30 percent doesn’t meet Euro-3 Standard and some 20 percent is sham.”
According to Kuiun, a low price is the first sign of counterfeit, considering that there is no way the consumer can tell the difference between the genuine and fake product without a lab test, whereas higher prices can serve as a reasonable proof of quality. His advice to the motorists is to use brand name filling stations and to take a closer look at the equipment, as well as the surroundings. His logic is simple enougH: “If these people can afford to keep a filling station tidy and well staffed, there is no reason for selling a fake product.”
Not so long ago, the Antimonopoly Committee of Ukraine tried to improve the quality of gasoline sold at the filling stations and bring this market segment to order. The market, however, keeps complaining about low quality gasoline and soaring prices. Market operators are mad at the government’s inactive stand in the matter. Kuiun says the State Committee of Ukraine on Technological Regulation and Consumer Policy (Derzhspozhyvstandart) is Ukraine’s only authority tasked with monitoring gasoline quality. It is also true that this bureaucratic structure failed to carry out a single inspection of the quality of filling stations’ products last year for the good old reason of lack of funds.
