Pump Price Increased! (After petrol duty hike)

On 23^rd February 2015, the Singapore Government announced a hike in the petrol duty in the Singapore Budget 2015. The increase for premium grade petrol and intermediate grade petrol was $0.20 and $0.15 respectively, from $0.44 and $0.41 previously. Thus, the final petrol duty rate for premium and intermediate petrol grade become $0.64 and $0.56 respectively.

The sudden increase in petrol duty caused a large ripple or tsunami across the petrol companies in Singapore, namely, Caltex, Esso, Shell and SPC and they all scrambled to increase their pump prices after the stroke of midnight on the announcement day.

Pump Prices prior to increase in petrol duty

	Caltex	Esso	Shell	SPC
Ron 92	$1.82	$1.82	NA	$1.81
Ron 95	$1.86	$1.86	$1.86	$1.85
Ron 98	$2.05	$2.02	$2.03	$1.99
Premium	NA	NA	$2.40	NA

Pump prices just after increase in petrol duty

	Caltex	Esso	Shell	SPC
Ron 92	$2.00 (+$0.18)	$1.98 (+$0.16)	NA	$1.97 (+$0.16)
Ron 95	$2.04 (+$0.18)	$2.02 (+$0.16)	$2.04 (+$0.18)	$2.01 (+$0.16)
Ron 98	$2.28 (+$0.23)	$2.23 (+$0.21)	$2.28 (+$0.25)	$2.20 (+$0.21)
Premium	NA	NA	$2.65 (+$0.25)	NA

Well, as you can see from the tables above, the increase in petrol duty for premium grade petrol and intermediate grade petrol was only $0.20 and $0.15 respectively BUT the increase in actual pump prices ranged from $0.16 to $0.25! Where is the justification for the absurd increment?

Let me tell and show you why.

Listen.

The reason is, the hike in petrol duty eats into the petrol companies’ profit margin, if they should increase exactly the increased amount.

Now look.

By now, everyone should know that petrol companies here all offer 5% site discount if you are their member and holding their cards namely, Shell Escape, Caltex Thanks!, Esso Smiles, SPC&U.

In addition, all petrol companies also tied up with banks to give further discounts ranging from 5% to 10% should you make payment with their credit cards.

Let’s compare the profit margin of petrol companies before and after hike in petrol duty, using Caltex Ron 95 and Ron 98 and payment by UOB credit card (less 14% discount) for comparison.

Before the hike in petrol duty

	Pump Price (a)	Less 14% discount (b)	Duty before hike (c)	Final Price (a)-(b)-(c)	Remarks
Ron 95	$1.86	$0.2604	$0.41	$1.1896
Ron 98	$2.05	$0.287	$0.44	$1.323

After the hike in petrol duty

	Pump Price (a)	Less 14% discount (b)	Duty before hike (c)	Final Price (a)-(b)-(c)	Remarks
Ron 95	$2.04	$0.2856	$0.56	$1.1944	Increase in profit
Ron 98	$2.28	$0.3192	$0.64	$1.3208	Decrease in profit

If petrol companies increased the price by only $0.15 and $0.20

	Pump Price (a)	Less 14% discount (b)	Duty before hike (c)	Final Price (a)-(b)-(c)	Remarks
Ron 95	$2.01	$0.2814	$0.56	$1.1686	Decrease in profit
Ron 98	$2.25	$0.315	$0.64	$1.295	Decrease in profit

So as you can see, if the petrol companies were to increase exactly the same value as the increase in petrol duty, they will suffer a great loss! How can we let our mighty petrol companies suffer a loss? How can we let the increase in petrol duty eat into their big fat salary and bonuses?

So to be fair to them, we have to let them increase the price more than the increase in petrol duty! 

Justified! right?

Tags: Singapore Budget 2015, increase, hike, petrol duty, $0.15, $0.20, Caltex, Esso, Shell, SPC