It’s almost impossible nowadays to flip through the newspapers without reading something about falling oil prices. Many questions and reasons have been raised about the falling prices, and there has been all kinds of speculations on how the falling prices will affect the economy.
Over here at Thoughts of Real Singaporeans, we have one very simple question:
Petrol come from oil also right? Then how come our petrol prices not falling like oil prices?!
And this is not the only time petrol prices don’t fall together with oil prices. Just take a look at the historical chart below, from the good people at Cozy Little Haven:
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Seems unfair, isn’t it?
The reason for this, as we learnt, is because crude oil prices is not the only determinant for petrol prices. Other major cost factors include refining costs (how much it costs to turn crude oil into petrol and other products), distribution costs (how much it costs to transport the refined petrol), and of course the usual retail costs like marketing, advertising and staff salaries.
Most of these costs are not as fluid (pun intended) as crude oil prices, so it makes sense that petrol prices usually do not fall as much as crude oil.
On the bright side, historical charts have also shown that after a while petrol prices do catch up with oil prices. So I guess we could wait a while more before petrol prices fall lower.
In the meantime, we could take public transport, and hope that they don’t breakdown.