Fuel prices in Ukraine are falling, but gasoline is becoming cheaper more slowly than diesel. The reason lies in the difference in profitability between these segments.
Serhiy Kuyun, director of the A-95 Consulting Group, writes about this , as reported by Dengi.ua .
How Much Have Fuel Prices Dropped in Ukraine?
According to Serhiy Kuyun, diesel fuel has already dropped by more than 12 UAH/liter from its peak, and just last week, prices fell by up to 5 UAH/liter at some retail chains. At the same time, the price of gasoline is declining more slowly due to lower profitability in this segment compared to diesel.
Why Gasoline Is Getting Cheaper More Slowly Than Diesel
An expert analysis shows that the spread between the customs value and the retail price of gasoline in June is about $200 per metric ton, compared to $293 per metric ton in February. For diesel fuel, this figure stands at $310 per metric ton versus $238 per metric ton, respectively.
“In other words, there are no windfall profits that could explain the slowdown in price declines. Gasoline margins have collapsed entirely, which is why its price isn’t really falling. Diesel is currently propping up the gas station business,” Kuyun noted.
What Else Is Holding Back the Decline in Fuel Prices
Prices are also being sustained by significant stockpiles of expensive fuel, built up in the spring amid fears of a shortage due to the escalating situation in the Middle East. The expert explains that low global prices do not reflect the actual cost of fuel in storage. According to his calculations, the customs value of fuel in June averaged $1,223 per metric ton over a three-week period, or 70.5 UAH per liter at the border. Accounting for delivery to Kyiv (2.5 UAH/liter), distribution costs (3 UAH/liter), and an advance tax (1 UAH), the prime cost for gas stations is about 77 UAH/liter, whereas the average retail price as of June 22 was 78.5 UAH/liter. In addition, fuel networks’ finances continue to be strained by losses from Russian attacks on oil depots, gas stations, and logistics infrastructure, which operators are forced to cover out of their own pockets.
“Current global prices are not the only factor in pricing… with that level of competition, that number of gas stations, supply sources, and logistical capabilities, such a market has no chance of operating under any rules other than market ones,” the expert concluded.
