What determines petrol prices in Singapore?
Every motorist has pondered this question at some point.
We did a bit of research and here’s what we came up with.
Note that this list is not definitive. There are costs of doing business that will never be revealed to the media.
1) The price of oil per barrel heavily affects petrol price.
Singapore has oil refineries, but oil has to be imported into the country.
Taxes are of course levied on crude oil imported into the country.
The price of oil per barrel is the biggest factor that determines petrol price.
If OPEC decides to slash production, the price of oil usually rises.
When that happens, we all know that oil companies will pass that cost on to drivers.
2) Petrol taxes are probably the second-biggest determinant of petrol price.
At the moment, 92 RON is taxed at 56 per litre.
Premium grades (98 RON and Shell’s V-Power) are taxed at 64 cents per litre.
3) Don’t forget refining costs.
Crude oil has to be refined in order to be turned into petrol and diesel.
Refining oil is not a cheap process.
4) The costs of running a petrol kiosk.
Oil companies pay a lot of money to lease the land used for petrol kiosks.
They have to factor this overhead cost into their operation.
There are also utilities and other related costs, such as staff wages.
All these are then added to the petrol price.
5) Marketing, advertising and promotions (A&P).
Oil companies also have to market their other products, such as lubricants and additives, too.
This adds to the cost of doing business, which is again reflected in petrol price.
Those credit card promotions/tie-ups, user rewards points and other programmes all cost money, too.
Wah, will petrol ever become cheaper?
There may be petrol price fluctuations, but the reality is that oil is a finite and dwindling resource.
But on a whole, the demand for it is only increasing.
Going by the rules of economics, this means that the price of oil will only continue to rise.
Unless of course, new oil reserves are discovered and tapped.