Retail sales of gasoline hit a decade low

Employees of gas stations now have more time to rest

Photo: Alex Solodunov

Retail sales of gasoline dropped in July by 25% to 212,500 t compared with the same period of 2013, according to the data of the State Statistics Service, which does not take into account Crimea and Sevastopol. This is a record decline over the past ten years. Sales of diesel fuel dropped by 14.4% over the same month to 151,900 t. A statistical analysis over seven months shows that last year’s demand for diesel fuel maintained its position. Over January-July, 1.5 mn t of gasoline was sold, which is 11% less than the corresponding indicator of 2013. Sales of diesel fuel sank only by 0.3% to 1.05 mn t.

In the shadows

Expensive fuel with low purchasing power of consumers is the key reason for declining sales, says General Director of the A-95 Consulting Company Serhiy Kuyun. “Since the start of the year, the average price of gasoline increased from UAH 11 to UAH 16.2,” he specifies. The decrease in consumption in the eastern part of the country due to the anti-terrorist operation contributed to this.

Analyst of UPECO Serhiy Syrenko says that during the active combat actions more than half of 850 gas stations in the Donetsk and Luhansk oblasts stopped operating. For instance, due to the combat actions, the Parallel Company (a chain controlled by Rinat Akhmetov) was forced to suspend operation of some of its gas stations in cities in the Donetsk and Luhansk oblasts. “As of August 22, 54 of 117 gas stations are not operating, including 45 located in the ATO zone. This spurred the decrease in demand for gasoline by 28% and diesel fuel by 7% over seven months of 2014 compared with the same period of last year,” says Parallel General Director Olena Khyliyenko. Some gas stations renewed their operation when the Ukrainian army re-established control over the cities. “Mainly local operators are operating,” Syrenko noted.

The sale of fuel without receipts (unofficial sale) and the availability of bootleg gasoline are also among the reasons for declining sales, says Deputy Director of the R&D Center Psykheya Hennadiy Ryabtsev. According to Kuyun estimates, the shadow market accounts for around 30% of the sales. This primarily applies to gasoline as it is subject to high tax pressure. The taxes for one tonne of gasoline amount to around US $500 (EUR 198 excise duty) and for diesel fuel – US $250, noted Kuyun.

Decline will continue

The consumption of fuel will fall by 25% in 2014, industry experts believe. Over the past year, 4.89 mn t of fuel was sold, according to the SSS, not taking into account Crimea and Sevastopol. The price-setting policy of operators of gas stations will be primarily determined by the hryvnia exchange rate, since 80% of fuel is imported, specified Ryabtsev. This factor, however, could downplay the decrease in the prices of oil and petroleum products on the European market, says Deputy Head of Fuel and Energy Markets at DerzhZovnishInform Oleksiy Shevtsov. “If the hryvnia rate remains at the level of UAH 13-13.5/US $1, the calculated cost of imported oil products for retail sales will be within UAH 16.1-16.6 per liter of A-95 gasoline and UAH 15.5-16 per liter of diesel fuel,” he concluded.