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[Oil prices plummeted. Depth] The price of oil sees a negative local car owner: How to explain the price of Hong Kong oil?

2020-04-28T02:32:24.133Z

International oil prices continued to slump. New York oil futures fell to minus 40 US dollars on Monday and closed at 37.63 US dollars per barrel. This was the first negative closing in history, with a drop of more than 300%. London Brent oil also fell to 25.57 US dollars per barrel



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Written by: Lin Jiaqi

2020-04-28 10:23

Last update date: 2020-04-28 10:26

International oil prices continued to slump. New York oil futures fell to minus 40 US dollars on Monday and closed at 37.63 US dollars per barrel. This was the first negative closing in history, with a drop of more than 300%. London Brent oil also fell to 25.57 US dollars per barrel, a drop of 9%. Fuel has always been the main "car maintenance" expenditure of many car owners in addition to parking fees. International oil prices have plummeted, and local car owners naturally have expectations that fuel prices will follow the decline. However, this is not the case. Facing the long-term "accelerating slowdown" phenomenon in the local market, Hu Hongyu, Chairman of the Competition Commission pointed out on Monday (April 27) that Hong Kong oil companies and oil prices "have no free market, only Market Failure", appeal The government regulates oil prices through policy intervention.

New York oil and Bran oil are important standards for international oil prices, and the recent decline is not unrelated to the spread of new coronary pneumonia around the world. However, the international oil prices have been falling, but Hong Kong's fuel prices have remained unmoved. According to GlobalPetrolPrices.com, an international oil price monitoring website, Hong Kong's auto gasoline and diesel prices are the best in the world. As of April 20, the price of gasoline per liter in Hong Kong was as high as 16.64 Hong Kong dollars. One liter is more expensive than the international average price of 7.19 HKD.

Why is the price of oil in Hong Kong "non-invasive"? Could it be that the impact of falling oil prices has not yet surfaced, and that the “good time for oil” has not yet arrived?

The recent decline in international oil prices is not unrelated to the spread of new coronary pneumonia around the world. (Getty Images)

Will Hong Kong's oil prices plummet?

No, the Environment Bureau explained this when responding to the Legislative Council ’s questions about gasoline prices at the beginning of the year: Since Hong Kong does not have an oil refinery, the local vehicle fuel is imported refined oil, not crude oil. Therefore, the rise and fall of international crude oil prices are not necessarily directly related to the retail price of automotive gasoline.

Even though the government says it has been monitoring the retail prices of local auto fuels and using international oil prices as a reference, the international standard of the government is the "Singapore Platts average price" (that is, the FOB prices of Singapore's unleaded gasoline and auto diesel), not New York. Future oil and Brent oil.

Referring to the data of the Consumer Council ’s oil prices, after calculating discounts and tax exemptions, taking ordinary grade gasoline as an example, the price of one liter of gasoline has hovered between 8 and 10 yuan in the past month. Let ’s compare the two figures of import price and retail price of gasoline. According to the Census and Statistics Department, the average import price of auto fuel per liter was $ 4.21 last September, and the average retail price was $ 15.92; The price is $ 3.89, and the average retail price is $ 16.03. An increase in import prices does not mean that retail prices also increase, and vice versa. So, what is the basis for the rise and fall of oil prices?

An increase in import prices does not mean that retail prices have also increased. What is the basis for rising and falling oil prices? (Profile picture)

It is worth noting that the Consumer Council analyzed the price of motor fuel in 2015 and found that there is a problem of "accelerating and slowing down" in oil prices. Many oil companies said that the level of international oil prices is not directly related to the retail price of gasoline. Instead, it means that oil prices are affected by rising costs. The costs they say include gasoline taxes (Hong Kong charges $ 6.06 per liter of unleaded gasoline), land prices, and rents at gas stations. Rates and so on. However, have these costs kept rising, causing oil prices to "accelerate and slow down"? Public opinion questioned this statement.

The Legislative Council Panel on Economic Development held a meeting on Monday. Members from different parties unanimously accused Hong Kong ’s oil prices of “accelerating the slowdown” because oil companies were suspected of “collusive pricing” and requested the authorities to submit relevant information to the Commission for investigation. The Commission has conducted market research on the issue of oil prices as early as 2017. However, due to the lack of power of the Commission to collect data, companies can refuse to hand over relevant information. This research report lacks the "net profit" of fuel retailers. The figures make it difficult for the Commission to have a more in-depth analysis of the real profits of oil companies.

Hong Kong has fewer gasoline options

At present, major oil companies in Hong Kong only sell two types of gasoline: 98-octane standard gasoline and 98-octane premium gasoline. The Commission ’s report once suggested that the government can directly require retailers to introduce lower-price 95-octane gasoline to provide consumers with cheaper alternatives. However, one year after the report was published, the Environment Bureau expressed concern that the proposal would affect the market ’s response to the re-tendering of the gas station and would reduce the number of bidders. At the same time, it was emphasized that "unless there are very good reasons for public interest, the government should try not to interfere with the automotive fuel industry or regulate its business model as much as possible."

The government uses "free market economic operation" as a reason for "non-intervention in the fuel industry." (Profile picture / photo by Luo Junhao)

The report of the Commission has two figures worth noting:

1. The Commission commissioned a sample survey by the Social Science Research Center of the University of Hong Kong in 2017 and found that over 99% of private cars in Hong Kong can use 95 octane gasoline, and only about 15% recommend drivers to use 98 octane gasoline.

2. Another survey found that more than 85% of the respondents indicated that if the retail price of lower octane gasoline is 10% cheaper than 98 octane gasoline, they may switch to it; of these, nearly half of the respondents The authors even expressed affirmation or were most likely to switch.

In neighboring Singapore, the local competition bureau conducted a market survey on vehicle fuel reports in 2016. Unlike Hong Kong, Singapore ’s four major oil companies all sell 95-octane gasoline and 98-octane gasoline, of which 60% Of car owners choose 95-octane gasoline, but less than 30% choose the latter, the price is an important factor.

The government uses "free market economy operation" as the reason for "not interfering with the fuel industry", but the paradox is that a large number of car owners have been "deprived of expensive oil" without the introduction of cheaper gasoline in the oil company, disguising the consumer's choice There is no "price competition" among oil companies. Consumers should have the right to "choose" in the free market, but the government does not interfere with the commercial decisions of oil companies on the grounds of "free market".

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In-depth report on oil prices

Source: hk1

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