Will petrol and diesel prices rise? How will the increase in excise duty affect fuel prices from 1 July?
17 June 2024 16:52
ЕКСКЛЮЗИВ
Excise taxes on diesel fuel, petrol and liquefied gas will increase from 1 July. The Verkhovna Rada passed the relevant law in early June. The excise tax on diesel fuel will increase by 27%, on petrol by 14% and on LPG by 7%. Following the adoption of this law, a number of experts said that the price of fuel would now increase dramatically. However, whether this is true and whether Ukrainians should prepare their wallets for another fuel price increase, Kommersant Ukrainian 
Prerequisites, not real price increases
In an exclusive commentary to Kommersant Ukrainian
“Indeed, the prerequisites have been created, but they are not as critical as they could be. Because we will have a gradual increase in excise duty. And from the first of July to the second half of the year, we can expect an average increase in petrol prices by UAH 1.5, diesel fuel by UAH 1.80 – UAH 1.85, and liquefied gas may rise in price by about 20 kopecks per litre,”
– kosyanchuk said.
He stressed that such fluctuations could be caused not only by excise tax increases, but even by fluctuations in the hryvnia exchange rate or, for example, by fluctuations in market prices in Europe.
Will all petrol stations raise fuel prices?
Given that the safety margin in retail is currently around UAH 5 to UAH 8, not all petrol stations can immediately raise fuel prices.
“There is a formula for sales efficiency, where the fixed costs of the filling station are at the top and the litres sold are at the bottom. That is, it is better to sell more litres at a lower price, not vice versa,”
– said the President of the Association of Ukrainian Oil Market Operators.
How a fuel price increase will affect the prices of other products
The National Association of Extractive Industries of Ukraine is against the fuel excise tax increase, as rising fuel prices could lead to higher production and transportation costs.
“This decision, although aimed at harmonising with EU norms and increasing state budget revenues, could have devastating consequences for our economy. The mining industry, like the agricultural sector, is heavily dependent on diesel fuel. Rising fuel prices will lead to higher production and transportation costs, which will ultimately affect the end consumer through higher prices for goods and services,”
– the EBA believes.
They also believe that such an increase will have a critical impact on small and medium-sized businesses.
“For small and medium-sized businesses that use generators to generate electricity during power outages, the increase in excise taxes will be an additional blow. At a time when many Ukrainians are already below the poverty line, rising prices could worsen the economic situation and social sentiment even further,”
– said the National Association of Extractive Industries of Ukraine.
In turn, the President of the Association of Petroleum Market Operators of Ukraine also added that the increase in excise taxes will lead to an increase in the price of other goods.
“The rise in price may occur in the food industry and in other transport costs, as transport costs, unfortunately, have risen in price due to the fact that there is no one to drive trucks because the boys are being taken to the army. The cost of transportation across Ukraine has almost doubled since the 18th of August and may rise further,”
– kosyanchuk summarised.
Author: Alyona Kaplina
