Singapore's anti-competition watchdog has found no evidence to suggest that petrol companies are colluding to set pump prices, Minister of State for Trade and Industry Koh Poh Koon said in Parliament yesterday.
Also, petrol companies use prices of refined wholesale petrol, known as Mean of Platts Singapore (MOPS) prices, when making pricing decisions, not the prices of crude oil which has yet to be processed, he said.
Dr Koh was replying to three MPs who had asked why pump prices had not fallen despite the plunge in crude oil prices. The MPs, including Ms Lee Bee Wah (Nee Soon GRC) and Mr Lim Biow Chuan (Mountbatten), also asked if there were cartel practices.
Dr Koh noted that a study released by the Competition Commission of Singapore (CCS) last week showed that prices for the popular octane-95 grade of petrol have moved in tandem with wholesale prices of refined oil in the past six years.
There was also "no significant variation" between the time taken to raise - or lower - listed prices at the pump, in response to changes in wholesale prices.
But he assured the House that CCS would continue to monitor the developments.
Crude oil price had dropped by an average of 59 cents per litre between June 2014 and this January. During the same period, the listed price of octane-95 petrol fell by 35 cents per litre while wholesale petrol prices fell by 52 cents per litre.
This represents a 15 per cent drop in octane-95 petrol prices, and a 53 per cent drop in wholesale petrol prices.
But Dr Koh said the smaller percentage drop in pump prices largely reflects the fact that wholesale petrol prices accounted for less than one-third of the listed pump prices. Operating costs, taxes and duties, land costs, discounts and rebates also affect pump prices.
He added that after taking into consideration discounts, rebates and the increase in petrol duty imposed in February last year, the effective drop in pump prices for consumers was 45 cents per litre.
However, MP Ang Wei Neng (Jurong GRC), citing his own calculations, said petrol companies were charging consumers at least "25 per cent more".
Dr Koh noted that the operating income of petrol companies has generally risen in the past few years. But "an increase in profits in itself is not a contravention of the Competition Act unless the increase is due to market players engaging in anti-competitive behaviour", he said.
Ms Lee suggested removing the "three-quarter tank rule" - which mandates that Singaporeans driving to Malaysia have at least three quarters of their tanks full - to introduce more competition into the market. Dr Koh replied that it would need more study.
This article was first published on March 1, 2016.
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