On Monday (20 April) the price of oil declined to the lowest level never before seen in history. Oil prices collapsed to go below US$0, reaching an unprecedented value of – US$37.63.
According to Bloomberg, Brent crude fell to US$25.92 whereas a barrel of West Texas Intermediate (WTI) dropped to a record low of US$1.69 as at 9.40pm on Monday. These extreme values were about US$66 and US$77 each respectively just a year ago.
Despite the unprecedented world price changes, pump prices in Singapore has remained stable.
A litre of 92-octane and 95-octane petrol is listed at S$2.05 and S$2.09 respectively for all brands, as stated on Fuel Kaki’s website, which is a Consumers Association of Singapore portal that monitors fuel prices.
These prices, before discounts, have been the same since 25 March when Brent’s price was about US$26 and WTI’s price at US$20.
Diesel’s price is listen as between S$1.69 and S$1.72 whereas a litre of 98-octane is listed at between S$2.43 and S$2.69.
There have been complaints by motorists that price adjustment occurs quickly upwards but prices are very slow to decrease; petrol prices are sticky downwards. Another concern is the perceived lack of transparency regarding fuel pricing that motorists also point out.
However, a thing to bear in mind when looking at price changes of fuel is the time lag that exists before world price changes are reflected into the local market. Christopher Tan, the Senior Transport Correspondent of the Straits Times explained that: “there is usually a lag between price movements of crude and refined products. Retailers have to sell off the ‘high cost’ petrols in their inventory before they can start repricing their fuels.”
“Oil companies are profit-motivated businesses; and it would not be a surprise if they delayed downward adjustments for as long as possible,” he also pointed out.
Only the price of diesel dropped by RM0.03 to RM1.43 per litre, whereas the prices of RON95 and RON97 both will remain unchanged at RM1.25 per litre and RM1.55 per litre.
For the past seven weeks, fuel prices dropped and the Malaysian government stated that it would continue to track the price movements of global crude oil and put in place appropriate measures to safeguard the wellbeing of Malaysians. According to the Malaysian government, the COVID-19 pandemic fuelled economic uncertainty which sent the global crude oil prices spiralling downwards.
Any adjustments will like be done by the Malaysian government after 24 April, to reflect Monday’s catastrophic decline into the negative of world oil prices.