What will fuel prices be?

Economy · 14:53 22.02.2005

This question concerns everyone, because the price of fuel is an important factor in the formation of prices and tariffs for practically all goods, works and services. Therefore, as a rule, an increase in prices for petroleum products immediately causes a chain reaction of rising prices for food and industrial goods, changes in tariffs for passenger transportation, in the sphere of housing and communal services, etc. The rise in prices causes particular worry and concern among agricultural producers, because spring field work will soon begin.

So what is the situation with fuel on the petroleum products market? In December-January there was some increase in prices for certain petroleum products. Some business structures, economic entities on the petroleum products market, using the political situation in the country to their advantage (lengthy election campaigns, the period of formation of a new government, local authorities), unjustifiably raised prices. Meanwhile, as First Vice Prime Minister Anatoliy Kinakh noted, there are no economic prerequisites in Ukraine for a sharp increase in prices for petroleum products.

Four of the six domestic oil refineries (OJSC "Khersonnaftopererobka", OJSC "Naftokhimik Prykarpattia", OJSC NPK "Halychyna" and OJSC "Lukoil-Odesa Refinery") process oil exclusively on tolling terms. That is, the wholesale price of petroleum products is formed by the enterprises that own the crude oil which arrives for processing at Ukrainian refineries, mainly from Russia. The Government of the Russian Federation in January of this year adopted a resolution according to which, from February 1 of the current year, the export duty rate on crude oil and petroleum products was reduced by almost 18 percent. The value added tax was also removed. All this makes it possible to reduce the price of a ton of oil by approximately 80 US dollars. Consequently, there are all possibilities for stabilizing prices for petroleum products on the domestic market. Price monitoring conducted by the state price control inspection in the region as of February 15, 2005, also indicates some decrease in average price levels for certain types of petroleum products in the region. In particular, prices for diesel fuel, gasoline of grades A-76, A-92, A-95, A-98 decreased within the range of 0.3-3.2 percent compared with January 1, 2005.

Volodymyr MOVSHUK, deputy head of the state price control inspection in the region.

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What will fuel prices be?

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