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 Cabinet of Ministers Set Marginal Gas Prices

Yesterday during the Expert-Analytical Group of the Cabinet of Ministers new marginal prices for oil products were approved.

"Oil traders will have to sell their fuel only within these marginal prices", said one of the meeting participants Oleksandr Syrenko, analyst of the Upeco consulting company.

A source in Ministry of Energy clarified that the prices will remain the same: AI-95 shall cost no more than 11.20 UAH/liter (Premium - no more than 5.16 USD/gallon) and the diesel fuel - no more than 10.18 UAH/liter (4.69 USD/gallon), reports Kommersant.

There is no reason to substantially increase marginal prices right now, stated the source. "That is why they will probably remain the same, with corrections regarding the dollar rate (i.e. 0.2%). The prices we have right now are as high as they will go up until the end of September when the next meeting takes place".

According to Upeco, the price for Premium gas of the WOG, Okko, and Lukoil gas station chains has already exceeded the marginal price and these chains have 18% market share.

Last week the gas prices increased for the first time since the beginning of August. The market participants think it is related with the world quotes for oil products and dollar rate fluctuations. They forecast the prices to grow until the end of September resulting in 5-6% increase. Due to the investors' hopes for stimulating measures of the European and US central banks the oil prices started growing since September 1. Thus, as of yesterday, the OPEC oil basket price grew from $109.52 to $114 per barrel. Bloomberg forecasts that oil and oil product price growth will continue at least until the end of September.

Galychyna Ltd. (oil processing complex) press service notes that the current gas prices growth is related to Ukraine's overdependence on the imported oil products that are growing since the beginning of September. You cannot limit the prices under these conditions".

"If the oil product prices go up nobody can stop it and I think the Ministry of Energy understands it", says Director of Donetsk Oil Service Viktor Martirosyan. "It is obvious that the hryvnia will give then ll these agreements will be automatically annuled. At the same time, if the oil product prices will drop with the marginal price of 11.20 UAH/liter (5.16 USD/gallon) I doubt that anyone will sell them cheaper".

A-95 Consulting Company Director Serhiy Kuiun says that practice shows - limitations never do anything good and in case of price increase either lead to deficit or quality loss. "To maintain low prices the gas stations will simply start selling a product of a lesser quality", says Kuiun.

"It is stupid to demand anything from the market under today's conditions. Nobody believes that the Cabinet of Ministers or the Ministry of Energy can control the situation. They could not even defend their market from total control of Russian and Belarus suppliers', says Dmitrii Marunich, Director of Institute of Energy Research, "that is why there is no point relying on the power of the instructions of the Expert-Analytical Group".

 
 
 
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