In Singapore, the price of the most popular 95-octane grade petrol at pump stations dropped by S$0.20 per litre. This is due to the crash in global oil prices amid the price war between major oil-producing countries Saudia Arabia and Russia.
According to the Senior Parliamentary Secretary for Trade and Industry, Dr Tan Wu Meng, on Wednesday (25 March), the “slight lag” of six days in the changes in petrol price was due to a “pass-through of over three-quarters of the decrease” in international crude oil prices.
In early March, the three-year deal between Saudi Arabia and Russia broke as both countries became embroiled in a war for global oil market share. Since the price war started, global oil prices have plummeted to their lowest levels in years.
The price of Brent crude dropped from US$66 (S$95.43) to US$34 (S$49.16) per barrel from 2 January to 9 March, Dr Tan pointed out.
He further remarked, ”If this price decrease was fully passed through, or in other words, mirrored in retail petrol prices, then retail petrol prices would have dropped by 26 Singapore cents per litre…The listed price of octane 95 petrol fell by 20 cents per litre, with a slight lag of six days.”
Based on a study on retail petrol prices in 2017 by the then-Competition Commission of Singapore, it is “typical” for the pass-through for both price increases and decreases to be about 70 per cent, Dr Tan added.
Dr Tan was answering to a question by Member of Parliament Lee Bee Wah, as to whether the drop in crude oil prices has translated to a lower pump petrol prices, as well as if the ministry would enforce any measures to correct the prices if the changes are not realised by petrol companies accordingly.
Dr Tan asserted, “To get petrol at the pump, the crude oil has to be refined and processed…In addition to the cost of refining, there will also be operating costs, taxes, duties, and land costs on the one hand, as well as rebates and discounts on the other hand.”
Well-informed consumers are a “key deterrent” towards unreasonable pricing decisions, even if retail petrol prices are decided by the market, Dr Tan reasoned.
In January earlier this year, Fuel Kaki, a retail petrol price comparison website has been launched by the Consumers Association of Singapore, as part of its initiatives to empower buyers.
“The Government will continue to ensure well-functioning competitive markets and empower consumers to make informed decisions,” Dr Tan concluded.