Oil price drop isn't trickling down to consumers

Motorists are not benefiting from the collapse of oil prices.

Oil plunged nearly 25 percent on Monday, the biggest fall since the 1991 Gulf War when the United States launched air strikes on Iraqi troops following its invasion of Kuwait.

The plunge was triggered by the two leading oil producers - Saudi Arabia and Russia - launching a price war over the weekend.

But retail petrol prices in Hong Kong have hardly changed.

The oil price data archive of the Consumer Council says only one oil company has lowered the price of regular unleaded fuel from HK$10.03 a liter on Sunday to HK$8.88 on Monday. Other companies maintained the price or slightly lowered it - by 10 HK cents a liter.

Drivers in Hong Kong did not benefit from the oil price slide as they still needed to pay about HK$17 a liter yesterday, which included a fuel tax of HK$6.06 a liter.

"The oil companies have to reduce the prices by 30 to 40 percent," a driver said.

"It's more expensive here than other places like Malaysia and Australia."

Another driver said the oil companies in Hong Kong have the same price and differed only in discounts.

The import price of unleaded petrol in March 2010 was slightly more than HK$4 a liter and the ex-duty retail price was about HK$8 a liter. In December last year, the import price was less than HK$4 a liter, but the ex-duty retail price was more than HK$11 a liter.

A similar trend was found in diesel.

The import price of diesel in March 2010 was about HK$4 a liter and the ex-duty retail price was more than HK$9 a liter. The import price remained at a similar level in December last year compared to 2010, but the ex-duty retail price climbed to more than HK$14 a liter.

Ben Chan Han-pan, a lawmaker from the Democratic Alliance for the Betterment and Progress of Hong Kong who chairs the Legislative Council panel on transport, said fuel prices are "quick to go up and slow to come down."

He said many countries have listed fuel as a strategic material and the prices cannot be free floating.

William Chung Siu-wai, director of the Energy and Environmental Policy Research Unit at City University, said fuel in Hong Kong was mainly bought from oil refineries in Singapore, and the oil companies have never disclosed their purchase price.

He said fuel should be listed as strategic material and the government should request oil companies to disclose such information.

The Environment Bureau said in January that oil companies decided the retail prices of auto fuels in Hong Kong based on commercial principles and their operating costs.

The bureau said changes in international crude oil price and changes in prices of unleaded petrol and motor vehicle diesel are not necessarily the same as auto fuels in Hong Kong are imported refined oil products, so it would be more appropriate to look at the trend of Means of Platts Singapore and the import prices oil companies pay.

"MOPS prices fluctuate day to day, but oil companies do not adjust their auto-fuel prices daily," the bureau said.