Pump rates stay high despite sharp drop in oil price

Despite the recent sharp correction in Brent crude price from US$86 per barrel in late September to US$76 per barrel, we have not seen a drop in our pump prices.

Platts 95 ron gasoline price hit a high of US$94.49 per barrel on Oct 2, but the price dropped to US$80.75 per barrel on Oct 26.

This is a drop of US$13.74 per barrel, or a 14.5 per cent drop, but yet our pump price is still holding up.

I am sure that oil companies will say that pump prices in Singapore are a component of high excise tax, high land price for petrol stations, high logistics costs and overheads.

In January 2016, the Ministry of Trade and Industry Singapore (MTI) released an article, Understanding Petrol Prices In Singapore, and provided some explanations on how our pump prices move.

The Competition and Consumer Commission of Singapore (CCCS) conducted a study and found that every 10 cent change in Mean of Platts Singapore (MOPS) price, the listed petrol price changed by 7 cents in the same direction over a 10-day period on average.

So does it mean that we will see a sharp drop in our pump prices?

I am sure that the Consumers Association of Singapore has done a lot of work to ensure consumers are protected against major oil companies.

Perhaps NTUC should look at running no-frills petrol stations in Singapore.

David Goh Chee Hoe

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A version of this article appeared in the print edition of The Straits Times on October 31, 2018, with the headline Pump rates stay high despite sharp drop in oil price. Subscribe