Fuel Prices in Ukraine vs. Poland: A Surprising Explanation
Date: 2023-10-12 Author: Dima Zakharov Categories: ECONOMY
Fuel Price Disparity: The Impact of Polish "Pre-election Stability"
According to Sergey Kuyun, the director of the consulting group A-95, the reason behind the higher fuel prices in Ukraine compared to Poland is Poland's government practice of freezing fuel prices, demonstrating artificial "pre-election stability." Despite a market price of 8 zlotys (equivalent to 68 hryvnias), a liter of gasoline and diesel fuel currently costs only six zlotys (51 hryvnias) in Poland due to this populist approach.
Kuyun straightforwardly points to populism as the answer. In June, the state monopoly Orlen, led by a member of the ruling "Law and Justice" party, froze fuel prices at its stations, regardless of the fact that global oil and petroleum product prices increased by 25% from July to September. This decision led to fuel shortages at Orlen stations throughout the country, including Warsaw. To prevent public alarm, notices of technical maintenance have been posted on fuel pumps, and some stations have disappeared altogether.
"In my calculations, during this period, the company with 60% 'state' shares lost nearly $500 million. Private shareholders, who were also forced to adhere to Orlen's prices, lost just as much. This automatically translates into significant losses for the state budget due to unpaid taxes (VAT and income tax)," suggests Kuyun.
The expert does not rule out the possibility of private shareholders filing lawsuits against the Polish oil giant in the future, as many of them have suffered considerable losses due to this "pre-election stability."
Fuel Prices Surge in Ukraine
In just one week, from September 30th to October 6th, the average price of A-95 gasoline in Ukraine increased by 30 kopecks, reaching 55.41 hryvnias per liter. Simultaneously, A-95+ gasoline became 26 kopecks more expensive, now priced at 58.33 hryvnias per liter, while diesel fuel prices surged by 41 kopecks, reaching 55.50 hryvnias per liter.
According to Sergey Kuyun, the director of the consulting group A-95, the reason behind the higher fuel prices in Ukraine compared to Poland is Poland's government practice of freezing fuel prices, demonstrating artificial "pre-election stability." Despite a market price of 8 zlotys (equivalent to 68 hryvnias), a liter of gasoline and diesel fuel currently costs only six zlotys (51 hryvnias) in Poland due to this populist approach.
Kuyun straightforwardly points to populism as the answer. In June, the state monopoly Orlen, led by a member of the ruling "Law and Justice" party, froze fuel prices at its stations, regardless of the fact that global oil and petroleum product prices increased by 25% from July to September. This decision led to fuel shortages at Orlen stations throughout the country, including Warsaw. To prevent public alarm, notices of technical maintenance have been posted on fuel pumps, and some stations have disappeared altogether.
"In my calculations, during this period, the company with 60% 'state' shares lost nearly $500 million. Private shareholders, who were also forced to adhere to Orlen's prices, lost just as much. This automatically translates into significant losses for the state budget due to unpaid taxes (VAT and income tax)," suggests Kuyun.
The expert does not rule out the possibility of private shareholders filing lawsuits against the Polish oil giant in the future, as many of them have suffered considerable losses due to this "pre-election stability."
Fuel Prices Surge in Ukraine
In just one week, from September 30th to October 6th, the average price of A-95 gasoline in Ukraine increased by 30 kopecks, reaching 55.41 hryvnias per liter. Simultaneously, A-95+ gasoline became 26 kopecks more expensive, now priced at 58.33 hryvnias per liter, while diesel fuel prices surged by 41 kopecks, reaching 55.50 hryvnias per liter.
