Based on the most recent “Worldwide Value of Dwelling (WCOL)” report revealed by the Economist Intelligence Unit (EIU), though Hong Kong’s value of dwelling rating has dropped to the fifth place, the oil value per litre tops the world once more. The truth is, even in April 2020, when the worldwide oil value dropped to the destructive vary, the native oil value was nonetheless fully unaffected. In right now’s Kwiksure function, we are going to analyze the explanations behind the excessive oil costs in Hong Kong.
How costly is oil in Hong Kong?
On the time of writing, petrol in Hong Kong was USD? $2.50 per litre, up by about 14% from final 12 months’s USD? $2.19. Town with the second highest petrol value is Amsterdam, at USD $2.18 per litre, considerably decrease than Hong Kong by 14%.
Supply of Hong Kong’s petrol is, surprisingly, Singapore
All native refined oil merchandise come from Singapore. The petrol produced is then transported to Hong Kong by oil vans and saved within the oil depot in Tsing Yi, as a result of the transportation value of cruise ships is increased than that of land. As a result of excessive lease of oil depots, there are solely 4 oil firms in Hong Kong that import petrol from Singapore, specifically Shell, Caltex, Sinopec, and Esso. Each PetroChina and Feoso Oil purchase refined petroleum merchandise from these 4 oil firms.
As well as, the price of opening a gasoline station is expensive as a result of the land value in Hong Kong is sky-high, and the “land” auctioned to grease firms is merely the appropriate to make use of for 21 years, as an alternative of precise possession.
Petrol costs should not solely affected by the price of oil
About 22% of every litre of petrol in Hong Kong goes to the manufacturing? value, about 33% goes to taxes (as a result of the federal government regards gasoline as a luxurious merchandise, and has imposed a gasoline tax of USD $6.06 per litre of unleaded petrol since 1997), and about 43% is the gross revenue of oil firms. Subsequently, modifications in worldwide oil costs can solely have an effect on the price of oil, and have a restricted affect on the general value.
Oil firms refuse to introduce cheaper petrol varieties
Solely three kinds of gasoline, 98-octane customary unleaded petrol, 98-octane premium unleaded petrol, and one diesel, are presently obtainable in Hong Kong. Cheaper options like 92- and 95-octane petrol choices should not obtainable.
Former Chairlady of the Competitors Fee Anna Wu stated she was significantly sad with the federal government’s rationalization for its refusal to mandate that oil firms reintroduce the cheaper 95-octane petrol, because it affords shoppers a less expensive different. The federal government has refused to reintroduce this different gasoline though motor gasoline experiences from different nations present that greater than half of the drivers select to make use of 95-octane petrol, which is 15% cheaper than 98-. Though in 1991, each 95- and 98-octane unleaded petrol had been obtainable in Hong Kong, all oil firms determined to withdraw 95-octane unleaded petrol from the market in lower than a 12 months of gross sales. Retailers have stated up to now that their resolution to solely promote 98-octane petrol mirrored buyer desire. The federal government selected “to not intrude with the gasoline business” on the grounds of sustaining a “free market”.
“Increased improve, decrease lower ” and “Sooner improve, slower lower”
As well as, analysts identified that neither the Competitors Fee nor the Client Council may discover proof that the 4 firms “colluded in setting costs” (that’s, as soon as one oil firm adjusts the worth, the opposite oil firms will comply with inside a day or two). They might at most name it “parallel pricing”. It’s as a result of oil firms provide reductions on gasoline playing cards, fleet playing cards, and limited-time reductions, inflicting the ultimate value paid by totally different shoppers to be totally different. However it’s not tough to discover a value pattern of “increased improve, decrease low cost” and “quicker improve, slower lower”. Structural issues have all the time existed in Hong Kong’s oil market, but the federal government has not adjusted its insurance policies to manage the revenue mannequin of oil firms.
“Increased improve, decrease lower”
Based on the Client Council’s “Auto-fuel Value Monitoring Evaluation 2020”, evaluating the cumulative improve or lower in petrol and Brent crude oil costs within the 7 years between 2013 and the primary quarter of 2020, when the oil value dropped, the petrol value additionally dropped however the magnitude was smaller by USD? $2.4. When the oil value elevated, the petrol value additionally elevated however the magnitude was bigger by USD? $1.99.
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