Loh Pin Chuan, Public Affairs Manager of ExxonMobil Asia Pacific attempted to reply to Mr Ryan Tung's query on the less than perfect correlation between pump prices and crude oil.
Loh Pin Chuan listed and explained the following factors affecting pump prices:-
a) internationally traded wholesale prices;
b) operating and capital costs;
c) taxes and duties;
d) currency exchange rates; and
e) market competition.
Essentially Pin Chuan's reply confirmed my usual understanding that there are many cost items affecting final retail price of their products or services.
But this explanation led me to the next question ie. do Shell, ExxonMobil, Caltex and SPC all have the same exact cost structures?
Apparently they do as they generally and largely (until recently) adjust their pump prices at about the same time and by the same amount.
Pin Chuan explained the "same-price" phenomenon - "Competition is keen in geographically small Singapore, and motorists are extremely price-sensitive ... no company will allow the others a price advantage at the retail pumps."
There is pro and con in this situation. Motorists are also at the mercy that at least one of the 4 operators make the first move to adjust prices down. If all 4 operators are "lazy" in adjusting down, who is to tell them to adjust?
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