Questions
Er Dr Lee Bee Wah: To ask the Minister for Trade and Industry (Industry) (a) whether current retail petrol prices at petrol pumps reflect the fall in oil prices; (b) whether there is a trend of petrol companies increasing prices faster than they decrease when there are changes to the oil prices; and (c) if so, whether the Ministry plans to implement measures to ensure that petrol companies adjust prices accordingly.
Mr Lim Biow Chuan: To ask the Minister for Trade and Industry (Industry) whether the Competition Commission of Singapore regularly monitors the price of petrol in Singapore to ensure that there are no cartel practices that will breach the competition rules in Singapore.
Mr Ang Wei Neng: To ask the Minister for Trade and Industry (Industry) in view of local petrol prices not falling as much as crude oil prices, whether the Competition Commission of Singapore will consider launching an inquiry on the practices of local oil companies.
Oral Answer by Dr Koh Poh Koon, Minister of State for Trade and Industry
1. In 2015, the Competition Commission of Singapore (CCS) commenced a study on the factors affecting the movement of petrol prices in Singapore since 2010.
2. CCS found that the petrol companies use Mean of Platts Singapore (MOPS) prices, not crude oil prices, in their cost accounting and pricing decisions for retail petrol. Crude oil price is the price of unrefined oil while MOPS price is the price at which petrol companies purchase refined wholesale petrol from the refineries. MOPS price tends to be higher than crude oil price as it includes the cost of refining crude oil into wholesale petrol.
3. In 2015, MOPS price made up less than one-third of the listed retail petrol price. Other components of retail petrol price include operating costs, taxes and duties, land costs, discounts and rebates. These non-fuel components have generally increased in the past few years.
4. The retail petrol price that consumers generally pay includes the petrol levy as well as discounts and rebates. Consumers enjoyed an average of about 18% in discounts and rebates off the listed price for Octane 95 petrol in 2014 through site discounts, loyalty programmes, and credit card payment.
5. Between June 2014 and January 2016, crude oil price fell by an average of 59 SGD cents, MOPS price fell by 52 SGD cents and the listed price for Octane 95 petrol fell by 35 SGD cents. The pass-through, while relatively high at around 70%, is not complete because of the non-fuel components which make up more than two-thirds of listed retail petrol price. After taking into account the discounts and rebates that consumers enjoy, and the levy increase in February 2015, the effective price that consumers paid for Octane 95 petrol fell by 45 SGD cents, implying a pass-through of over 85%.
6. Over the six-year period between 1 January 2010 and 31 January 2016, CCS observed that the listed prices for Octane 95 petrol moved in tandem with MOPS prices. There was no significant variation between the time taken to either raise or lower the listed prices for Octane 95 petrol in response to changes in MOPS prices. The magnitude of the change in listed prices for Octane 95 petrol relative to the change of MOPS prices was also observed to be the same whether MOPS prices increased or decreased.
7. Based on the information gathered, there is no evidence to suggest collusion in retail petrol pricing, even though petrol companies monitor and react to each other’s published prices. CCS will continue to monitor developments in the retail petrol market.