In Russia, a spike in the price of propane-butane

8 September 2018

The reasons for the growth and price Outlook for LPG in the winter of 2018-19 years.

The summer of 2018, has seen a sharp spurt in prices of liquefied petroleum gas (LPG). For motor vehicles this means the rise in price of propane-butane (LPG), used mainly on LCV ("GAZelle" and srednetonnazhnye).

The most popular Russian propane-butane on LCV "GAZelle BUSINESS"

The price of LPG on assurances of heads of the companies-manufacturers will start to decrease, but special conditions according to the analytical resource "agate" no. More likely the opposite – the situation will continue to deteriorate for consumers and, conversely, will allow the vendors to warm their hands. What caused this rise and what can be done in order not to freeze in winter 2018-2019.?

Gas equipment is now put directly on the conveyor (see photo of "GAZel NEXT" off the Assembly line AZ GAS

Equipment for LPG (APG) began to be installed on trucks even in the Soviet Union (photo 4,5-thin GAS-33075)

the guilt or innocence of the 2018 world Cup?
Happy for fans around the world the world Cup FIFA 2018 still left their mark in the pricing policy for liquefied petroleum gas. The fact that the movement of vehicles transporting dangerous goods was severely limited during this period. On communications providers for the duration of the supply of liquefied gas by rail tank cars from Siberia lengthened almost an order of magnitude and still not stabilized. As a result – a shortage of propane in the regions and increase its value.
According to the Decree of the President of the Russian Federation No. 202 09.05.2017 "On peculiarities of application of security measures during the world Cup FIFA 2018" to transport certain types of dangerous cargoes, including liquefied natural gas, was suspended for the period from 25 may to 25 July. If several years ago such measures would not affect the price of gas today, the gas market of the Russian Federation has developed so complex a situation that even the slightest mistakes, cause surges in the price tags.

Guilty outages of gas plants?
Downtime at the plants of gas and oil traditionally is planned for the summer months. At this time, conducted routine repairs, which leads to a reduction in the supply of liquefied natural gas to the Russian market. Naturally, in the domestic market there was a shortage of propane, which flowed in the absence of prospects for reducing its cost in 2018.

Blame Ukrainian exports?
Ukrainian market of LPG increases the volume. So, in 2018, its volume is equal, for example, Polish market and other major importers of Russian gas. This is not surprising against the background of a significant increase in the cost of gasoline and the declining real income of the population of Ukraine. Perhaps the majority of Ukrainian motorists in for basic savings (environmental considerations here at the end of the list of motives) moved to more affordable propane instead of soaring in the price of high-octane gasoline. So, today the cost of one liter of A-95 is on the Ukrainian market a minimum of 30 hryvnias, in terms of rubles is worth more than ₽70 per liter. Here, by the way, and the boom in the market of electric vehicles (mainly used), the import of which Ukraine has already appeared on the 5th place in Europe.
The increasing demand for LPG from the population on the background of the inability of industry of Ukraine to increase its own production of liquefied gas leads to tragic results. So, the number of employees at full capacity of oil refineries in the country is reduced to zero, and those that still somehow functioning, do not even reach cover 15% of demand in the market.
even with record low oil prices, the Ukrainian gas-refining is almost in a lethargic state. So, despite the alternative-energy wind-solar "ritual", this neighboring country is still very firmly sit on the gas needle and remains a "chronic" consumer of Russian gas. If 5-7 years ago in the off-season gas storage facility in Russia could be crowded, today any surplus is sustainable demand from Ukraine and other countries-consumers. So that Russians don't need
relax and expect the cost reduction in such a sought-after commodity, which was lined up a whole queue of buyers.

Blame domestic demand?
Of course, this factor remains one of the key reasons for the increase in the cost of LPG, which is easily explained by the basic laws of Economics. For example, the population began increasingly to use liquefied gas for heating private houses, which, for example, contributed to the expansion of the range of budget heating
systems and gas tanks.
Park of cars that drive on LPG, is growing every year and only buses and heavy trucks drive on compressed natural gas methane (CNG), a large portion of the cylinder "Gazelles" just use propane-butane. Here just all is explained by the laws of the market – price of propane is 20-30% lower cost of diesel fuel, and in comparison with gasoline cheaper in twice.



is it Possible to "lay a straw"?
If homeowners can still stock up in advance the cheapest gas in the gas tanks, then motorists can only go into the pocket, because the forecasts in the gas segment is quite disappointing. If the winter of 2016-2017. the increase in gas prices was a rather unpleasant surprise, this year it's a pattern. Retail price of LPG soared by 31.8%, and wholesale – 45% in full compliance with the pessimistic scenario. And will grow steadily until the spring of 2019.
Reasons for panic, no cause for relaxation. Objective reasons for the increase in the price of propane are:
1. The tightening of taxation.
2. The lack of supply of liquefied propane from the oil companies.
3. Stable growth of demand for gas on domestic and foreign markets.
4. Downtime and unscheduled repairs of large gas processing plant.
5. The rise in world prices.

  Almost the only factor available to the authorities to curb the rise in prices is the maneuver of export duties, which need to be raised from the current very low values similar to the export of naphtha, i.e., about one order of magnitude.
Whether this measure against the possible rise in world oil prices to stabilize the domestic market of propane – will show the near future, because first you have data increased duties make..