SINGAPORE - The Competition Commission of Singapore (CCS) has found no evidence to suggest that petrol companies are colluding to set pump prices, said Minister of State for Trade and Industry Koh Poh Koon in Parliament on Monday (Feb 29).
He was responding to questions from three MPs about why pump prices have not fallen although crude oil prices have fallen. They also asked if there were cartel practices.
Crude oil prices fell by an average of 59 cents between June 2014 and January this year.
Dr Koh said petrol firms use refined wholesale petrol prices, known as Mean of Platts Singapore (MOPS) prices, instead of crude oil prices, when making pricing decisions.
This is because crude oil is a raw material which has not yet been processed.
Citing the competition watchdog's study, released last week, Dr Koh said prices for the popular octane-95 grade of petrol have moved in tandem with wholesale prices of refined oil over the past six years.
There was also "no significant variation" between the time taken to raise listed prices at the pump, or to lower them, when wholesale prices changed.
Dr Koh said there was "no evidence" to suggest that petrol firms were colluding in setting pump prices, and that the CCS will continue to monitor the developments.
Between June 2014 and January this year, the listed price of octane-95 petrol fell by 35 cents. In the same period, wholesale petrol prices fell by 52 cents.
This represents a 15 per cent drop in octane-95 petrol prices, and a 53 per cent drop in wholesale petrol prices.
But Dr Koh said the smaller percentage drop in pump prices largely reflects fact that wholesale petrol prices accounted for less than one third of the listed pump prices.
Operating costs, taxes and duties, land costs, discounts, and rebates, also affect pump prices, he added.
He added that after taking into consideration discounts, rebates and the increase in petrol duty that kicked in in February 2015, the effective drop in pump prices was 45 cents.
However, MP Ang Wei Neng (Jurong GRC), citing his own calculations, said that petrol companies were charging consumers at least "25 per cent more".
In response, Dr Koh said that the operating income of petrol companies has generally risen over the past few years.
But "an increase in profits in itself is not a contravention of the competition act unless the increase is due to market players engaging in anti-competitive behaviour," he added.
Responding to MP Lee Bee Wah's (Nee Soon GRC) suggestion to remove the "three-quarter tank rule" to introduce more competition in the market, Dr Koh said that such a measure warranted more study.
The "three-quarter tank rule" mandates that Singaporeans driving to Malaysia have at least three-quarter of their tanks full, as petrol is significantly cheaper across the border.