The Competition Commission of Singapore 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.
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.
