Many participants in the car market (and not only the market) depend on the price of "autogas", a liquefied propane-butane mixture. Motorists who own cars with HBO are carefully watching the price tags at gas stations — currently, after the introduction of the first phase of the new excise tax on this type of fuel, prices have not jumped too much — on average +3 hryvnias.
There is no less interest in this issue among specialized service stations that install gas cylinder equipment, sellers of HBO kits, transporters (mostly taxis), where LPG is the main type of fuel, as well as importers of used cars.
In addition to the subject of excise duty, information recently appeared on the pages of "NaftoRynku" that the volume of imports of propane-butane mixture into Ukraine has fallen by 4-5 times. And this is another important factor that can affect all sectors dependent on the price and availability of LPG.
What is happening and what to expect next?
With this question, the Institute of Car Market Research turned to Oleksandr Sirenko, an expert at the NaftoRynok analytical agency .
"The imported volume should last at least until the end of October, and maybe more. LPG imports increased by 41.2% to 124 thousand tons during August 2024, compared to 87.8 thousand tons in July. However, wholesale and retail prices at gas stations are increasing because the excise tax has been raised . And here, previously purchased cheaper remaining LPG will not play a special role in price formation. Most likely, by the end of September, the retail price of autogas will be at the level of UAH 33-35/l.
Next, a new game will start from October. The foreign market will intervene, namely, a rise in prices at the border is predicted due to the entry into force of sanctions on propane-butane originating in the Russian Federation. In fact, since December 2023, these restrictions have already been put into effect, but so far they have given the Europeans the opportunity to end their annual contracts with the Russian Federation.
Now all the focus is on the Poles, who buy about 1 million tons of LPG in Russia. They will hoard it and probably sell less to us. Under such conditions, it is already possible to predict that the retail price of gas will cross the mark of UAH 40/l by the end of the year. Of course, if there is no global agreement to punish the Russian Federation with low oil prices (from the current $73-75 to $60/bar), then all energy markets will collapse without exception," concluded Mr. Sirenko.
LPG and car market
Currently, there are about 2.7 million vehicles in the Ukrainian fleet that use a gas mixture as the main or alternative fuel. Every month, on average, there are about 2 thousand HBO installations on cars.
It is clear that in the case of an increase in the price to UAH 40/l, the economic feasibility of operating cars with HBO will be a big question, since the liter consumption of this type of fuel is 20-30% higher, so in the end the difference between the price of a kilometer on gasoline and "gas" can be quite to level off
In turn, this will lead to a significant reduction in the volume of HBO installations, due to the same reason — lack of savings. Further, this may affect another segment of the market — the import of cars from the USA, in particular those models that were equipped with "atmospheric" engines with a volume of 2.5...3 liters, and which are quite popular in our market. Without HBO, it will not be very profitable to operate such cars, accordingly, buyers (and importers) will be forced to reorient themselves to versions with more modern engines of smaller displacement, but with direct gasoline injection and turbocharging (to which Ukrainian buyers sometimes have a stereotypical prejudiced attitude), or to electric cars, although the supply with them currently significantly exceeds the demand. Of course, all this is provided that the price of gasoline and diesel remains at the same level as it is now.
For reference: at the time of writing this article, 1 liter of propane-butane mixture costs UAH 31 on average, 1 liter of gasoline costs UAH 56, and private fuel costs UAH 53.
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