The Straits Times, Wednesday, June 25 2008
By Christopher Tan
Pump prices have risen again, with petrol going up by 5 cents a litre and diesel, 10 cents.
This latest increase, the 13th consecutive rise since last July, started when oil giant Shell raised rates at 4pm yesterday. By evening, Caltex and ExxonMobil had followed suit.
Industry observers were perplexed by the latest hike. Oil consultant Ong Eng Tong said: “There is no logic to the increase. Wholesale prices of refined products have actually fallen in recent weeks.”
There have also been reports that fuel usage in the United States, the world’s biggest oil consumer, had dipped. The recent removal of fuel subsidies in countries such as China and Malaysia is expected to dampen demand, if it has not already done so.
Ironically, in a time of record prices, oil companies say that profit margins in fuel retailing are thin.
In Singapore and Malaysia, British Petroleum has quit the fuel-retailing scene. In the US, ExxonMobil is selling off 2,000 stations to put its money in businesses with higher yields, such as exploration and refining.
With the latest adjustments here, a litre of 92-octane petrol costs $2.203 before discount. The 95 grade is now $2.236, while 98-octane is $2.31.
The so-called ultra-premium fuels cost more. Shell’s V-Power climbed five cents to $2.429, while Caltex’s Platinum rose by four cents to $2.426.
Diesel, which is used by taxis, buses and trucks, is retailing at $1.933. This fuel of commerce has nearly doubled in price from a year ago.
In effect, motorists are paying over 50% more for fuel. This means a car owner who spent $200 a month on fuel this time last year will now have to fork out over $300 a month.
As fuel prices rise, more people worldwide are filling up on credit, a practice oil firms have started to discourage as they have to pay a service charge to credit card companies.
The Petrol Dealers Association of Malaysia has asked its 3,500 members to accept only cash. Stations in Dubai stopped taking credit cards last year.
An industry source said this was unlikely to happen in Singapore for the time being.