Consumers Assn Of Singapore Petrol firms need to explain mystery behind pump pricing
Senior Transport Correspondent Christopher Tan rightly highlighted that petrol prices are currently retailing at only between 4.7 per cent and 6 per cent lower than in January, whereas Brent crude price has fallen by more than 40 per cent during the same period (Pump prices here yet to reflect plunge in crude oil rates, March 10).

It has become somewhat of a tired observation that whenever crude prices rally, oil companies are quick to raise pump prices, but drag their feet when the converse happens.

Nevertheless, the Competition Commission of Singapore was reported as saying that it found "no significant" difference in the speed of change whether prices move up or down.

Even if I accept this, of significance is also the quantum of adjustment. The usual explanation is that crude oil forms only a part of the prices at the pumps, and that there are other costs like administration, marketing, storage, transportation, and so on.

If motorists were to accept this line of reasoning, then the conclusion is that the operations of these oil companies are so inefficient that the price of petrol is largely made up of cost of stuff other than that of crude oil.

Along this line of reasoning then we are also left puzzled as to why in the case of a crude price hike, crude oil price seems to suddenly become a significant component of retail pump prices for its hike to be reflected immediately.

Over time, all these lags have resulted in the retail price becoming somewhat of a high-level gauge: pushed up in a hike but slow to slide down. The cumulative effect over the years is obvious. Motorists today are paying prices not too far from when crude was at the peak of US$147 per barrel in mid-2008.

Petrol companies owe the motoring public an explanation for this mystery.

Peh Chwee Hoe

Source: https://www.straitstimes.com/forum/petrol-firms-need-to-explain-mystery-behind-pump-pricing

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