Oil Costs Break All Records

Other brands simply vanished. As a result, a private car ride, let alone a taxi, will cost you twice as much than a week ago. Public transport (that which is still operational) maintains the same fares.

Vasyl Yastrubynsky, head of the price policy department, Kyiv City Administration, told The Day, "Raising prices has not as yet been considered by the Administration. Of course, the situation is being studied by the relevant bodies, including not only passenger carriage, but also bread and milk transportation.

When this is completed, appropriate proposals will be submitted." Mr. Yastrubynsky considers that there is absolutely no economic basis for this price jump. "Current petrochemical costs allow for at least 200% profit. There is the government to step in when a situation like this arises in any civilized country. It sets new rules of the game, in accordance with market realities. State regulation is required at a time of crisis. So what is being done to remove the reasons causing this price jump?"

He further questioned the possibility of businessmen supplying oil products to Ukraine under the circumstance, profitable as such transactions might seem, referring to the Verkhovna Rada's resolution confirming tax concessions for enterprises with capital investment. Unless subject to such concessions, only a crazy man would buy and transport oil products to Ukraine. He would clearly go bankrupt. In a word, the situation is being examined and a decision will be made only after a reliable forecast of oil products for the next couple of weeks is made.

Meanwhile, Deputy Premier Mykhailo Hladiy (also appointed Minister of Agribusiness last week) expects the gasoline price jump to cause only a slight increase in the price of bread. The Economy Ministry is consulting oil traders, pressing them to increase supplies, but apparently their attitude is negative. Interfax Ukraine reports that oil traders do not believe the effectiveness of the Cabinet's tax concessions. Instead, they believe that the costs will continue to increase unless the market is saturated. Russian Premier Sergei Stepashin also met with his oil people yesterday.

Russia's Novosti News Agency informs that this country may respond to world oil price increase by raising export duties. Russian oil traders do not welcome the idea, and Ukraine may well have to sustain higher imported oil costs. Presidential candidate Yevhen Marchuk believes that the gasoline crisis shows the executive's "perfect helplessness" in dealing with "elementary issues." "The President declares that he will put the oil market in order. In reality, he shows that he no longer capable of effectively influencing the situation," said Mr. Marchuk. "I have already been informed that, because of the gasoline price increase, agricultural prices rose on the food market last weekend. Hence, we are in for another round of inflation," he added. "A chain reaction has started, affecting essential commodities, making primarily the socially unprotected strata suffer."

- Nota Bene: The following were Ukraine's wholesale gasoline suppliers in the first quarter of 1999: Kharkiv Branch of Bizon Ltd. (43.2%); Kharkiv branch of the Liutnia Enterprise (22.8%); Fianit (5.2%), and Aktiv; these firms also imported 12%, 6.75%, 1.7%, and 1.7% of diesel fuel, respectively. In all, they imported 76.1% of the gasoline and 22.3% of the diesel fuel imports without paying customs duties and taxes.