January 2023 Sees a Renewed Surge in Ukrainian Fuel Costs
Ukrainian consumers faced higher fuel prices in January 2023, driven by a combination of rising global oil prices and a stronger euro, which affects excise duties. The price of oil increased from $60 to $70 per barrel since the start of the year, directly impacting wholesale fuel costs. This economic pressure is particularly acute for a nation managing both wartime logistics and civilian needs. Specifically, wholesale gasoline prices rose by more than 3 hryvnias per liter.
Between January 15 and 29, the average price for A-95 gasoline increased from 58.46 to 59.75 hryvnias per liter, while A-92 gasoline reached 57.91 hryvnias. The cost of diesel fuel rose to 59.43 hryvnias per liter. The euro's exchange rate also climbed over the month, moving from 50.10 to 51.23 hryvnias, which raised the excise duty as it is levied in euros in Ukraine.
Impact of Excise Duty and LPG Shortages
Further contributing to the price hike, an increased excise duty on autogas (LPG) took effect on January 1. Additionally, a shortage of autogas emerged due to Russian attacks on port infrastructure late last year, which disrupted supply chains.
Analyst Serhiy Kuyun noted that "the price of oil has risen from $60 to $70 since the start of the year. Exchange rates are up by 1 hryvnia. Gasoline prices are also feeling the effect of heightened demand."
Meanwhile, Prime Minister Denys Shmyhal stated that "it is very important that today we have sufficient diesel reserves for both civilian and military needs in our state."
The January price surge stems from global economic factors like higher oil prices and a stronger euro, coupled with domestic challenges including the autogas deficit. This trend could influence the country's overall inflation rate and household expenses. The government's assurance of adequate fuel reserves for civilian and military use underscores the critical need for strategic planning in a volatile economic and security environment.