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Viscous oil

Oil prices have fallen quite a bit this year, but the prices that motorists pay at the pump in Singapore have not declined as much. What gives? It seems that wholesale prices account for only part of what we pay at the pump. Duties and taxes, for example, are charged by volume of fuel, and not the cost per volume of fuel, and so contribute a fixed amount to pump prices regardless of the spot price of Brent crude.

How does Singapore stack against other countries? JP Morgan just wrote an interesting report about that. They found that the October-to-June decline in Singapore pump prices was somewhere in the middle of the regional pack, more than South Korea, Hong Kong, Philippines, Japan, Indonesia and Malaysia, but less than Taiwan, China, Thailand and India.

"Direct and indirect subsidies/taxes for energy are in place across much of the region. While these have mitigated the impact of rising oil prices on the private sector, as was the case last decade, they have also slowed the passthrough of lower oil prices to pump prices, with the windfall being passed onto cost recovery," JP Morgan wrote in its report.

There was a nice table in the report too: