Costlier petrol unlikely to change driving habits, say experts

A busy Caltex petrol station on Upper Serangoon Road. The recent oil slump has kept pump prices lower than usual and will help mitigate the tariff increase for now. -- PHOTO: JAMIE KOH
A busy Caltex petrol station on Upper Serangoon Road. The recent oil slump has kept pump prices lower than usual and will help mitigate the tariff increase for now. -- PHOTO: JAMIE KOH

While petrol prices have risen following the Government's hike in duties, motorists are unlikely to give up their rides just yet, experts said.

This is because the recent oil slump has kept pump prices lower than usual and will help mitigate the tariff increase for now.

Independent oil consultant Ong Eng Tong said oil prices may recover in the next five years when the shale oil supply from the United States drops.

On Monday, Finance Minister Tharman Shanmugaratnam announced during his Budget speech that the duty for premium grade petrol will increase by 20 cents to 64 cents a litre, while that for intermediate-grade petrol will go up by 15 cents to 56 cents per litre. The move is to discourage car usage and reduce carbon emissions.

Pump operators reflected the higher duties within a day, with the most popular grade of petrol, 95-octane, now costing between $2.01 and $2.04 per litre before discount, up from $1.85 to $1.89.

SIM University's urban transport management expert Park Byung Joon said the petrol duties are embedded in the pump price, making such a hike less effective compared to other taxation measures to discourage people from driving.

Also, compared to the outlay for a new car (usually about $130,000) an increase of $6 to $8 a week in petrol is negligible, he added.

But experts note that higher petrol duties may lead some drivers to look for alternatives to tighten their purse strings. Singapore Management University Assistant Professor Terence Fan said: "It is conceivable that some motorists may downgrade their petrol choice to save costs."

Drivers whom The Straits Times spoke to said they were unlikely to change their travel patterns.

Bank executive Jay Lim, 37, said: "I'm not sure for what price I would leave the car at home, given that I've already sunk so much money to own it. But I'd be much more keen to try the alternative of public transport if it were less congested."

adrianl@sph.com.sg