Will gasoline prices fall and gas stations deteriorate?

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The global fuel market is facing a global crisis, but Ukrainian gas stations are very different from their foreign partners

In the energy segment, an oil storm continues – the collapse of the WTI, falling demand, reduced production and real battles for market share have led to massive price fluctuations. Coronaviruses and quarantines with it are reducing the need for petroleum products, and this, in turn, creates an additional supply.

At the same time, a completely unprecedented situation is being formed: the world has not just faced the excess of oil, it also has nowhere to store it. According to the International Energy Agency (IEA), world oil demand will fall to a record high of 9.3 million barrels / day in the current year. This means that everyone is waiting for an unprecedented crisis in the industry.

Gas stations, taxes and quarantine

In this situation, it should be borne in mind that Ukraine belongs to countries that mainly import oil. The country’s own production tower can meet 60% of its needs, the rest is usually imported from Azerbaijan, but this is often not sufficient for the production of gasoline. Therefore, about half the supply of gasoline is imported from Belarus.

Thus, gas prices largely depend on the situation abroad. And while world prices have fallen to almost zero, the price of gasoline and diesel fuel in Europe has fallen by as much as 30% in one day – A-95 gasoline can be bought in Ukrainian currency for 2.5 UAH / L in translation. Therefore, there is also a drop in prices in Ukraine, but so far – by 10%.

Oil market collapse: Will gasoline prices fall and what’s wrong with Ukrainian gas stations. Photo: euroradio.fm

This is because domestic gas stations will fully respond to the drop in prices after only one or two months due to the sale of shares (purchased at the old price). In addition, taxes and dollar exchange rates also play an important role in matters of fuel costs in Ukraine. In addition, Ukrainian gas stations also suffer from a drop in demand provoked by quarantine, and sometimes they cannot lower prices for a poorly sold product.

At the same time, the characteristic of the oil market in its physical component – combustible liquid must be sold out, and only then it will be possible to talk about leveling the situation. This industry does not tolerate moves. And for this we need such a demand until the coronovirus ceases to limit the world. The history of fluctuations in the price of oil seems at first glance to be long-lasting. Indeed, even after the quarantine is lifted, restrictions on the movement are likely to remain for some time.

Forecast and expectations

In any case, Ukraine should not expect a sharp drop in gas prices. The Antimonopoly Committee and independent experts believe that the cost will gradually decrease by an average of 3-5 UAH per liter. In macroeconomic forecasts, the National Bank has already kept oil prices in the region of $ 35 per barrel. In addition, according to NBU forecasts, the cost of gasoline in Ukraine may fall by 10–15% before the end of the year.

Consulting group A-95 gives more optimistic data, looking at the crushing collapse of oil product citations in Europe – up to 16 UAH / liter of gasoline and up to 14 UAH / liter of diesel fuel. But there is a condition of this forecast – the fall in oil prices should be fixed for at least one month. According to the director of the group, the decline in prices in the retail chains of Ukraine is recorded daily.

Oil market collapse: Will gasoline prices fall and what’s wrong with Ukrainian gas stations. Photo: Mergerplace

Some experts still believe that gas prices will be at the level of 20 UAH / liter – as it would be too much of a shock to gas stations. Gas stations are more likely to sacrifice employees for the economy than lower prices in the event of reduced demand and reduced sales.

Of course, one should not forget about illegal gas stations, which are over four thousand in Ukraine. Such stations evade taxes, both for fuel and for employees, which would allow them to establish really low price tags under current conditions. At the same time, the budget loss from the shadow oil market, which was already estimated at $ 10 billion a year, is likely to increase.

Read: Below zero prices: what happened to oil and what is the reason.


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