With worryingly high levels of inflation gripping the country and memories of the price hikes on household commodities during Tymoshenko’s first administration in 2005 still fresh in the electorate’s memory, rising petrol prices are most unwelcome news for the new government. “I think that it is no secret to anyone that oil has been reaching record prices on the world market and it is obvious that if oil prices are at such levels on the world market it influences the price of oil products in Ukraine as well,” Tymoshenko said at a press conference in Brussels on March 11. “This is the market and it dictates its terms,” confirmed Vitaliy Leonchuk, a representative of the Ukrainian oil company Ukrtatnafta.
Market specialists have also confirmed the recent Ukrainian petrol price rises as part of a wider global trend. Oil prices increased from USD 103 and reached USD 109 per a barrel (160 litres) on March 11. From March 10 to March 18 the petroleum price grew on average by UAH 0.35 per litre in Ukraine. According to the oil consulting company UPECO, the average price for the most frequently used petrol, A95, and diesel fuel was UAH 5.78 per litre on March 18.
Regional consumers hit hardest
Nevertheless, the situation was particularly harsh for drivers in Donetsk and Sumy oblasts and down in Crimea, where prices have already reached the psychological barrier of UAH 6 per litre. Dnipropetrovsk drivers were literally stopped cold in the middle of March because they could not find enough petroleum for their cars at all. Nearly all filling stations in the city gave out petroleum by special ticket only, setting a precedent that is bound to impact on faith in the current administration.
Suspicions and stabilization plans
Much as she did two years ago Yulia Tymoshenko has suggested that these price rises are partly due to the collusion of oil product traders. In recent days the PM has made a point of emphasizing that all Ukrainian oil refineries are privatised and that the country’s filling station chains are also private.
The Prosecutor General’s Office has charged the Antimonopoly Committee of Ukraine and the State Inspectorate on Price Controls to check into how prices for oil products were derived as a result of the current skyrocketing prices for petroleum and diesel oil. At the same time, Minister of Fuel and Energy Yuriy Prodan announced that the Cabinet of Ministers is intending to sign a memorandum on partnership with the biggest operators on the Ukrainian oil and oil product market on March 24-28 in a bid to cooperate and encourage price stabilisation.
Sensitive to global fluctuations
Serhiy Kuyun, the director of UPECO, who participated in memorandum discussions on March 21 in Kyiv, said that the government understands the situation with rising petrol prices and: “doesn’t worry a lot, fortunately.” However, he predicts that petroleum prices will grow further and reach UAH 6 per litre across the entire country. He explains that the Ukrainian oil product market is very sensitive to changes on the world market because 90% of all oil products contain some imported element. “They are either ready-made imported products, or made from imported oil,” he explains.
The global oil price has recently fallen on the world market and by March 21 it was pegged at USD 101.84 per barrel of crude oil. “If this downward trend is long-term and stable we will see a decrease in domestic prices for petroleum. In three to four weeks we will be able to see the trend more clearly,” forecasts Kuyun. Oil product traders are interested in decreasing prices as well, added Leonchuk. “Purchasing power is better in that case,” he explained.
