Expensive LPG: because it will go up and when will the “rollback” price

Liquefied gas for vehicles (LPG-propane gas-butane) continues to break price records: over the weekend it went up another 1.5—2 UAH/l, exceeding at some gas stations the figure is 17 UAH/liter. That’s almost 50% higher than it was a month ago. Many gas stations gas does not. But the experts of the fuel market calm: in mid-September, gas prices have to go down. But the carriers already raised prices for their services.

WHY EXPENSIVE. The main factor of price growth experts call a lack of supply on the market. As we told the analyst of “Consulting group A-95” Artem Kuyun, the main causes of the current shortage of LPG gas is the disorder of the market (many illegal filling stations), repairs of factories-manufacturers in Russia and Belarus, problems with transportation (shortage of diesel fuel on the Railways) and lack of diversification of supplies (mainly we import gas only from Russia and Belarus).

“From April until the end of June, prices fell, causing traders didn’t want to bring here more gas than necessary for retail. The situation was aggravated by the illegal immigrants: purchasing by Bank transfer the gas from the large traders, they immediately resell it for cash at RS 300-500/ton cheaper (without paying 20% VAT). In the end, a resource hole is growing”, — said the analyst. According to estimates Kuiun, the lack of market is now about 20%.

Director of special projects of the SEC “Psyche” Gennady Ryabtsev commented on the situation: “the Growing shortage of gas on the wholesale market led to a panic price increase. Really a gas at retail shouldn’t cost more than 15 UAH/l”.

WHAT’S NEXT. “In the retail price closer to the technological maximum of its further growth casts doubt on the feasibility of using gas (its consumption is more by 15-20% than that of gasoline. — Ed.). I think that this mark — 18 UAH/liter. the result is the expected significant decline in consumption, and the sooner it happens, the faster the fill the market. With cautious optimism I believe that this will happen by mid-September. And then — down to 11-12 UAH/l”, — summed up Kuiun.

According to forecasts Ryabtseva, prices will fall to previous levels, not earlier than the end of September: “the Price of LPG gas at retail should be no higher than 50-55% of the cost of gasoline A-95. If A-95 costs an average of 24.6 UAH/l, the gas will be next month on 12-12,5 UAH/l”. The authorities have also reacted to rising gas prices. First Deputy Prime Minister Stepan Kubiv has instructed the Ministry Gasregulating service, AMC, and GFS to examine the reasons for increase in the price of liquefied natural gas.

Fare: prices have raised

Expensive gas has caused a growth in prices for travel in the taxi and trucking, because, according to experts of the fuel market, about a third of the commercial fleet is now converted into a gas. If you usually travel to and from the city center in the residential area (distance up to 20 km) cost 70-80 UAH, yesterday in one of the companies we have wrung all 90 UAH. Travel in a minibus from the town of Korsun-Shevchenkovsky (Cherkassy region) to Kiev (“Vydubychi”) at a distance of 140 km is already 80 UAH (+UAH 5). Promise to raise the price of services in transportation of small cargoes (construction materials) and the transport company.

Economists say that the biggest rise in prices because of rising gas prices will have on transport as the price of fuel is more than half the cost of travel. “Shipping will grow by 15-20% in the coming days, as small traders there is no margin, they can’t wait until the cheaper gas. Then, perhaps, they will reduce the fares if the price of gas will return to its previous level,” — predicts the President Ukranalittsentra Alexander Ohrimenko.

But the Director of the Association of retail suppliers Oleksiy Doroshenko more optimistic. “Take for example the suppliers of bottled water, — says Alexei. If they raise the price of the bottle, you can lose customers. The price growth is possible where there are monopolies, as in the passenger transportation in the Outback”.

A sharp rise in price products and manufactured goods, the experts did not predict. “The price of products transportation costs are not more than 10%, so gas will add to the cost of milk, bread 1-2%” — calculated Doroshenko.