Fuel prices in autumn and winter: Impact of the upcoming excise tax increase

Starting September 1, a hike in excise tax rates on fuel is scheduled, but it is not expected to cause a substantial rise in gasoline and diesel prices. 

This forecast comes from Serhii Kuiun, a fuel market expert, during a briefing at the Media Center Ukraine.

“From September, the excise tax on gasoline will go up by UAH 1.5, while diesel fuel will see a slightly higher increase, just under UAH 2. The largest hike will be in liquefied gas, with an increase of around UAH 5. However, for gasoline and diesel, these changes are unlikely to cause noticeable price hikes, as fluctuations of UAH 1.5-2 are typical market variations that consumers rarely notice,” Kuiun explained.

Despite the larger increase in the cost of liquefied gas, Kuiun emphasized that it remains an economically viable option compared to gasoline and diesel, particularly for high-mileage drivers. 

“The price of liquefied gas is expected to rise more noticeably, with an anticipated increase of about UAH 5. However, this does not imply that it will become a less attractive option. Even with the price hike, liquefied gas will continue to be a much more cost-effective choice compared to gasoline, especially for those using LPG systems or those who drive long distances. This economic advantage will likely sustain interest in converting vehicles to LPG and encourage new installations of gas cylinder equipment. Although the cost benefits won’t be as substantial as they were before the increase, they will still be considerable,” explained Serhii Kuiun.

Additionally, Kuiun highlighted positive trends in global oil prices, which could mitigate the impact of the tax increase on fuel prices. 

“Currently, we’re observing some very positive trends in the oil market. Just yesterday, the price of oil dropped below $80 per barrel, down from $87 a month ago. If the new excise tax had been implemented today instead of September 1, we likely wouldn’t have seen any noticeable changes at the pump. The drop in the purchase price would have balanced out the tax increase, leading to no significant impact on fuel prices. In fact, we might have even seen a further reduction in prices in the domestic market,” the expert elaborated.

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