Wholesale fuel and petrol pump prices aligned: Study
Competition Commission says statistics over six-year period also reveal no price collusion
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 24 Feb 2016
Petrol pump prices have moved in tandem with wholesale fuel prices, according to a study by the Competition Commission of Singapore.
Based on data from Jan 1, 2010 to Jan 31 this year, the study found that while cost changes are not passed on entirely or immediately to consumers, there was "no significant" difference in time taken for rises or falls to filter to the pumps.
It noted that pump prices are influenced more by wholesale fuel prices rather than prices of crude oil, as the latter is a raw material which has not yet been processed.
During the period reviewed, every 10-cent change in wholesale fuel price resulted in a seven-cent change in pump prices.
Between June 2014 and this January - when crude prices fell by 67 per cent (or 59 Singapore cents per litre) - the wholesale petrol price fell by 53 per cent (52 cents), and the pre-discounted price of 95-octane petrol fell by 15 per cent (35 cents).
After discounts, rebates and February 2015's increase in petrol duty were stripped out, the 95-octane petrol price fell by 24 per cent (45 cents) in the period.
The commission said it did the study in response to public queries on why petrol prices did not seem to have fallen in tandem with crude oil price changes.
Competition Commission chief executive Toh Han Li said the change in petrol prices cannot be 100 per cent in line with changes in wholesale fuel prices because of other cost components such as land, labour and operations.
Competition Commission says statistics over six-year period also reveal no price collusion
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 24 Feb 2016
Petrol pump prices have moved in tandem with wholesale fuel prices, according to a study by the Competition Commission of Singapore.
Based on data from Jan 1, 2010 to Jan 31 this year, the study found that while cost changes are not passed on entirely or immediately to consumers, there was "no significant" difference in time taken for rises or falls to filter to the pumps.
It noted that pump prices are influenced more by wholesale fuel prices rather than prices of crude oil, as the latter is a raw material which has not yet been processed.
During the period reviewed, every 10-cent change in wholesale fuel price resulted in a seven-cent change in pump prices.
Between June 2014 and this January - when crude prices fell by 67 per cent (or 59 Singapore cents per litre) - the wholesale petrol price fell by 53 per cent (52 cents), and the pre-discounted price of 95-octane petrol fell by 15 per cent (35 cents).
After discounts, rebates and February 2015's increase in petrol duty were stripped out, the 95-octane petrol price fell by 24 per cent (45 cents) in the period.
The commission said it did the study in response to public queries on why petrol prices did not seem to have fallen in tandem with crude oil price changes.
Competition Commission chief executive Toh Han Li said the change in petrol prices cannot be 100 per cent in line with changes in wholesale fuel prices because of other cost components such as land, labour and operations.
"If the price of chicken fell by 20 cents, you can't expect the price of chicken rice to fall by the same quantum," he said.
The commission found no price collusion between oil firms here.
Mr Toh said even if listed pump prices tended to be similar, promotions and discounts differed.
On how oil companies have stopped publicising price changes in recent years, Mr Toh said: "I feel that's something that can be improved." He said the commission would consider persuading them to make prices more transparent.
But he also noted that some companies are barred from announcing price changes as it is deemed by legislators in their home markets as "price signalling" - an anti-competitive practice.
As a result, it is difficult for consumers to compare prices, and the most competitive company may not necessarily get the most customers.
"Unfortunately, the petrol companies don't make it easy for themselves," Mr Toh added.
Later this year, the commission will conduct a market survey to find out how motorists decide on their fuel purchases.
PARLIAMENT
'No evidence of cartel' among petrol companies
By Adrian Lim, The Straits Times, 1 Mar 2016
Singapore's anti-competition watchdog has found no evidence to suggest that petrol companies are colluding to set pump prices, Minister of State for Trade and Industry Koh Poh Koon said in Parliament yesterday.
Also, petrol companies use prices of refined wholesale petrol, known as Mean of Platts Singapore (MOPS) prices, when making pricing decisions, not the prices of crude oil which has yet to be processed, he said.
Dr Koh was replying to three MPs who had asked why pump prices had not fallen despite the plunge in crude oil prices. The MPs, including Ms Lee Bee Wah (Nee Soon GRC) and Mr Lim Biow Chuan (Mountbatten), also asked if there were cartel practices.
Dr Koh noted that a study released by the Competition Commission of Singapore (CCS) last week showed that prices for the popular octane-95 grade of petrol have moved in tandem with wholesale prices of refined oil in the past six years.
There was also "no significant variation" between the time taken to raise - or lower - listed prices at the pump, in response to changes in wholesale prices.
But he assured the House that CCS would continue to monitor the developments.
Crude oil price had dropped by an average of 59 cents per litre between June 2014 and this January. During the same period, the listed price of octane-95 petrol fell by 35 cents per litre while wholesale petrol prices fell by 52 cents per litre.
This represents a 15 per cent drop in octane-95 petrol prices, and a 53 per cent drop in wholesale petrol prices.
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PARLIAMENT
'No evidence of cartel' among petrol companies
By Adrian Lim, The Straits Times, 1 Mar 2016
Singapore's anti-competition watchdog has found no evidence to suggest that petrol companies are colluding to set pump prices, Minister of State for Trade and Industry Koh Poh Koon said in Parliament yesterday.
Also, petrol companies use prices of refined wholesale petrol, known as Mean of Platts Singapore (MOPS) prices, when making pricing decisions, not the prices of crude oil which has yet to be processed, he said.
Dr Koh was replying to three MPs who had asked why pump prices had not fallen despite the plunge in crude oil prices. The MPs, including Ms Lee Bee Wah (Nee Soon GRC) and Mr Lim Biow Chuan (Mountbatten), also asked if there were cartel practices.
Dr Koh noted that a study released by the Competition Commission of Singapore (CCS) last week showed that prices for the popular octane-95 grade of petrol have moved in tandem with wholesale prices of refined oil in the past six years.
There was also "no significant variation" between the time taken to raise - or lower - listed prices at the pump, in response to changes in wholesale prices.
But he assured the House that CCS would continue to monitor the developments.
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Crude oil price had dropped by an average of 59 cents per litre between June 2014 and this January. During the same period, the listed price of octane-95 petrol fell by 35 cents per litre while wholesale petrol prices fell by 52 cents per litre.
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 the 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 that after taking into consideration discounts, rebates and the increase in petrol duty imposed in February last year, the effective drop in pump prices for consumers was 45 cents per litre.
However, MP Ang Wei Neng (Jurong GRC), citing his own calculations, said petrol companies were charging consumers at least "25 per cent more".
However, MP Ang Wei Neng (Jurong GRC), citing his own calculations, said petrol companies were charging consumers at least "25 per cent more".
Dr Koh noted that the operating income of petrol companies has generally risen in 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 said.
Ms Lee suggested removing the "three-quarter tank rule" - which mandates that Singaporeans driving to Malaysia have at least three quarters of their tanks full - to introduce more competition into the market. Dr Koh replied that it would need more study.
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