Drivers pay as oilprice gap doubles

Local | Sophie Hui 22 May 2020

Drivers have been paying more for fuel as the gap between pump prices and Brent crude oil and Hong Kong imports has doubled in seven years.

Although the Consumer Council said there is no obvious sign of oil companies being "quick to jack up prices and slow to lower them," there is a clear sign that prices are "going up more and coming down less" in local gas stations.

The watchdog compared the data on Brent crude oil price, monthly import price and the average pump price of standard petrol in Hong Kong from 2013 to the first quarter of this year.

It found that the retail petrol price gap with Brent crude and import prices has widened by almost one fold in seven years.

The price gap between pump price and Brent crude oil price increased 85 percent from HK$5.12 per liter in October 2013 to HK$9.48 per liter in March this year, while the price gap between pump prices and import prices has recorded an increase of 107.9 percent from HK$4.06 per liter to HK$8.44 per liter.

The Brent crude oil price in January 2016 was HK$1.53 per liter and increased to HK$1.68 per liter this March. However, the average pump price before tax in March has increased to HK$11.15 per liter from HK$7.99 per liter in January 2016.

"After the second half of 2016, even when there was a relatively stable Brent crude oil price movement, the spread [price gap between import prices and pump prices] still continued to widen," said the council's vice-chairman, Antonio Kwong Cho-shing.

The council also found that there was a high level of conformity of pump prices among oil companies in Hong Kong.

In 2016, the percentage of days when all five oil companies had the same pump price was 66.3 percent. But the percentage rose to 86.8 percent last year and increased to 92.3 percent in the first quarter of this year.

The price adjustment behavior of these companies were also very similar in that they would adjust their prices to the same level within days, the watchdog added.

"Although the average amounts of walk-in discounts of the five oil companies were increasing, our analysis shows that, in absolute dollar terms, consumers have to pay more to purchase every liter of gasoline, ranging from HK$2.50 to HK$3.07 from 2016 to the first quarter of 2020," Kwong said.

Despite the oil companies having the same retail prices, it can be classified as "parallel pricing instead of price fixing," said the council's chief executive, Gilly Wong Fung-han.

She urged the government to increase the transparency of data, especially the import price.

The watchdog also suggested the government empower the Competition Commission to investigate the auto-fuel market.

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