Fuel prices are set to rise again: reasons and timing of the price increase.

Increase in excise taxes on automotive fuel in Ukraine

Starting from September 2024, Ukraine will begin to raise excise taxes on automotive fuel in accordance with the European Union's requirements under the Green Deal.

The first stage planned to change the excise tax on gasoline to 242.6 euros per thousand liters, on diesel fuel to 177.6 euros, and on liquefied gas to 148 euros. The next increase is scheduled for January 1, 2025, when the excise tax rates will rise again, which will inevitably affect prices for consumers.

Devaluation of the hryvnia is another factor contributing to the increase in fuel prices. The state budget for 2025 anticipates an exchange rate of 45 hryvnias per dollar, which will significantly impact the cost of imported fuel.

According to experts, a one-hryvnia devaluation leads to an increase in the price of fuel by 70-80 kopecks per liter. Currently, the average price of A-95 gasoline is 55.7 hryvnias per liter, diesel fuel is 52.2 hryvnias, and automotive gas is 35.3 hryvnias.

Global oil markets also affect prices. Over the year, the price of Brent oil has decreased from 91 to 73.1 dollars per barrel. This is due to decreased demand from China, the spread of electric vehicles, and stable oil supplies from Arab countries. However, in Ukraine, which depends on fuel imports, the cheaper oil does not always result in lower prices for consumers due to transportation costs and currency exchange rate effects.

Fuel prices in Ukraine / Photo: Canva

Experts also point out that after the first increase in excise taxes, significant price fluctuations were avoided thanks to high fuel reserves built up before the changes. However, this factor is temporary. As reserves are depleted and subsequent excise increases occur, along with the weakening of the hryvnia, the pace of fuel price increases may reach 9% by the end of 2024.

While an increase in prices is expected, experts believe that the main factor for changes in the market remains the economic situation in Ukraine, rather than fuel shortages or fundamental shifts in the global market.

In particular, the National Bank forecasts further increases in fuel prices due to possible hryvnia weakening. However, if currency stability is maintained, the price increase may be less noticeable for consumers.