Over ¾ of crude price drop passed through to motorists

The listed price of octane 95 petrol fell by 20 cents a litre, said Senior Parliamentary Secretary (Trade and Industry) Tan Wu Meng. "This represents a pass-through of over three-quarters of the decrease in crude oil price."
The listed price of octane 95 petrol fell by 20 cents a litre, said Senior Parliamentary Secretary (Trade and Industry) Tan Wu Meng. "This represents a pass-through of over three-quarters of the decrease in crude oil price."ST PHOTO: LIM YAOHUI

More than three-quarters of the recent drop in the price of crude oil has been passed through to customers, Dr Tan Wu Meng, Senior Parliamentary Secretary for Trade and Industry, said yesterday.

Dr Tan told Parliament that retail petrol prices here have fallen with the steep decline in crude oil prices from US$66 a barrel to US$34 between Jan 2 and March 9.

"The listed price of octane 95 petrol fell by 20 cents per litre, with a slight lag of six days," he said. "This represents a pass-through of over three-quarters of the decrease in crude oil price."

Ms Lee Bee Wah (Nee Soon GRC) had asked if retail prices at petrol pumps reflected the plunge in crude oil rates. She also questioned the lag in the price decrease being passed on to customers.

Dr Tan noted that crude oil has to go through refining and processing before it becomes petrol at the pumps. "There will also be operating costs, taxes, duties and land costs on the one hand, as well as discounts and rebates on the other hand," he added.

So, a pass-through rate of about 70 per cent is typical, Dr Tan said, citing an in-depth study on retail petrol prices in 2017 by the then-Competition Commission of Singapore.

He added that the market determines retail petrol prices.

The survey also found that, on average, petrol prices take longer to go up when global crude oil prices increase, compared with the decrease when crude oil prices fall.

He urged consumers to view petrol price comparisons across brands on the Fuel Kaki website, which is part of the Consumers Association of Singapore's efforts to help customers make informed decisions.

 

"Well-informed consumers are a key deterrent against unreasonable pricing decisions," Dr Tan said.

A version of this article appeared in the print edition of The Straits Times on March 26, 2020, with the headline 'Over ¾ of crude price drop passed through to motorists'. Print Edition | Subscribe