Why expensive gasoline? Why is Ukraine so much more expensive gasoline?

Steady price increase of gasoline prices upsetting motorists. What caused the growth of fuel prices and under what conditions can they decline? We present to your attention five reasons why expensive gasoline.

The people widespread joke: if oil becomes more expensive, and gasoline prices are rising, if oil is cheaper, and the cost of fuel increases. Economists have destroyed a common myth about dependence gasoline prices from oil prices. The fact that fuel prices are more affected by factors such as taxes, excise taxes, costs associated with reprocessing. Do not forget about inflation and growth rates.

Reason # 1: taxation

The Main factor underlying the growth of prices in the CIS, is the new taxation policy.

The transition to the new tax system in the oil sector, implying a tax on the additional income. Its calculation is not at all the revenue the oil companies, and the difference between the cost of production and the amount of income earned through trade resources — that's why expensive gasoline in Russia.

The Situation with taxation in neighbouring countries is similar. Experts in the field of macroeconomics claim that the main reason why in Ukraine the gasoline is the updating of the tax system. Thus, from 1 January 2017, the state raised the basic excise duty levied during the customs clearance of imported oil.

Reason # 2: rising oil price

The Speculative rise in world oil prices, the indicators of which range between $ 30-$ 40 per barrel — a significant reason that more expensive petrol. In the commodities market of the CIS countries 85 % of products are imported oil, so traders are not having the funds for stockpiling, is able to reverse the price hikes increase the cost of production. So, imported petroleum products steadily gain in value by 15-20 %.

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Delivery of goods to the foreign market — always of the expenditure process: export duty and logistics costs affect the cost of oil products. On top of that external prices are always much higher than domestic. Thus, the main reason why in Ukraine so much more expensive petrol, lies in the fact that diesel fuel represented in the Ukrainian market is imported fuel.

Reason # 3: the devaluation of the

Why expensive gasoline in Russia and Ukraine? Mainly because the cost of gasoline is directly proportional to the rate of exchange: trading procedures of the international level occur in U.S. dollars. Analysts say that the fall of the hryvnia by 1 point will lead to a rise in price of gasoline by an average of 70 cents per liter. Similar situation with the ruble weakening leads to playing domestic prices compared to export. Oil to solve this problem, measures are being taken to increase exports or to raise the domestic price level.

It is Worth noting that among the importers of purchase of currency at the commercial rate which is significantly higher interbank: difference can reach 3 to 7 rubles/ 1-2 hryvnia.

Reason # 4: seasonality

Indicators of Change in the cost of oil in the negative for the drivers side started, despite the fact that winter is traditionally characterized either stable or low gas prices in the first months of 2017.

As evidenced by the trend, the impact on the cost of fuel has seasonality. The answer to the question: “Why expensive gasoline?” experts are in increasing demand for petroleum products in the transportation industry and citizens-inhabitants. There is a pattern: the higher the demand, the higher the cost.

Why expensive gasoline in the Crimea and Russia? The main factor influencing the constant increase in prices, is the fact that the demand for fuel in Russia exceeds the offer: most of the raw materials go to the external market, but the number of motorists continues to grow exponentially.

Reason # 5: the excise duty administration

Imperfect system of administration of the new fuel excise, for example, transition to production measurement in liter equivalent — “throws” for every ton of fuel to about 4 euros. Enterprises engaged in the production and supply of oil, face difficulties in the procedure of registration batches — it directly affects the cost of gasoline, because the manufacturer builds into the price of the commercial risk of the company.

The Cost of gasoline: what to expect in the near future

Since the beginning of the year motorists consistently wonder why expensive gasoline in the first half of 2017 one liter of gasoline cost 3.1 percent more than last year. The rate of rise in price of fuel so high that it exceeds the official inflation 1.5times.

Change price tags upward, as was expected, occurred in the summer period. On top of that the cost of gasoline has affected and will continue to influence the planned repairs of the refinery in several regions, while domestic companies the implementation of the programme on modernization of production in the current economic situation seems impossible.

Stabilisation and reduction of prices on oil products, according to experts, is unlikely. However, the autumn and winter of 2017 will be the time when costs are back to normal. In General, experts agree that the limit to the cost of gasoline compared to last year should amount to 6-7 %.

About inflation in terms of increase of cost prices of gasoline

Change price tags on food products in upward due mainly to the fact that more expensive petrol. Why? Retailers setting prices for products, lay them in the margin by 3-4 percentage points because of the price hike of fuel, the cost of logistics, services and goods purchased. However, the increase in fuel prices will impact on all categories of food products, since the main aspect governing the prices of products, is the index.

Experts suggest that the maximum rise in prices will be observed in the non-chain gas stations because they are difficult to take control. But in large vertically integrated oil companies in the process of making significant changes in indicators on the price tags of the products will occur more complicated because the network of filling stations characterized by a wide range of opportunities associated with the profit.

In any case, to doubt that the increase in gasoline prices "overtake" inflation is not: a change in price ranges of fuel are displayed on the personal inflation every Russian. Buying an expensive fuel leads to a need to save on other products of daily use and search for products with a more modest price rates.