SINGAPORE was supposed to have emerged as a winner from the low oil prices in 2015. One year on, however, the picture is a lot more muddled, as the benefits of low oil prices have been masked by weaker-than-expected global demand.
The good news: Households have been the main beneficiaries, with electricity and petrol prices dropping, albeit to a more limited extent than the fall in crude oil prices. The bad news: Singapore's industries, which make up a larger share of the economy, have been bruised by the anaemic global economy more than they have benefited from lower costs.
The final conclusion on how much oil prices have affected Singapore is unclear, as the story is still unfolding. "It depends on which part of the economy you're looking at, and there's going to be a second round and third round of effects," said Mizuho economist Vishnu Varathan.
For the end consumer, relief has come through in the form of smaller electricity bills and petrol costs, as these fell about 15 per cent and 5.5 per cent respectively. Crude oil prices have slumped by 48 per cent on average from 2014 to last year.
The slide in electricity prices has been of a smaller proportion than crude oil as the cost of natural gas - which Singapore relies on to produce 95 per cent of its power - makes up only half the tariff; it also includes fees to pay for the electricity network and administration of the power system.
Petrol prices, similarly, have fallen by an even smaller amount as additional costs - from the point crude oil is produced till it reaches the pump - have to be taken into consideration, said oil companies.
These comprise both the prices of refined oil products themselves as well as non-oil related factors. ExxonMobil estimates the cost of wholesale fuel to make up about half of the total cost of petrol.
Wholesale prices are influenced by seasonal supply and demand, inventory levels, storage and transportation costs, an ExxonMobil spokeswoman told BT. "Besides wholesale prices, the retail prices of products are also influenced by other factors like marketing, storage, land prices, government taxes, currency exchange rates and competitive market forces," she said.
A hike in petrol duty rates in Singapore last year also means that some cost benefits have been erased from petrol prices.
Still, the savings on these would have meant more disposable income for consumers, whose higher spending resulted in an increase of about 0.2-0.4 per cent in Singapore's economic growth last year, according to estimates by Oxford Econo-mics economist Sian Fenner.
Limited as the benefits to the end consumers might be, economists say they have had it better than the industries.
"Lower electricity prices would benefit industrial users, but this has to be offset with the weaker order pipeline from the demand side as well," said OCBC economist Selena Ling.
Singapore's economy is exposed to the entire supply chain of oil, from the upstream exploration through its offshore marine industry to trading and the petrochemical sector.
Sustained low oil prices have dampened rig-building activities and the marine and offshore sector here. Industrial production in the offshore and marine sector fell 18 per cent last year from 2014.
Keppel Corp in its latest results said it was setting aside S$230 million for possible losses; its offshore and marine arm has cut 6,000 positions, or 17 per cents of its total workforce, since January last year.
Sembcorp Marine, due to release its results on Feb 15, is facing speculation of being privatised or given a shot in the arm through an injection of funds from its parent group, Sembcorp Industries. Keppel and Sembcorp Marine are the world's largest rig-builders.
The offshore and marine sector would face even sharper headcount reductions this year, said Mike Wilkshire, oil and gas director at recruitment agency Hays.
"Singapore was in some respects insulated last year as the shipyards would have been running (on previously ordered rigs)," he told BT. With no more orders forthcoming, "we expect to see more of a downturn", he added.
Banks have also taken a hit from the weakened offshore and marine sector, whether through direct loan exposure or the lack of capital-market activity in oil-related sectors.
DBS has estimated that some 5 per cent of its portfolio could be affected if oil prices remained low for the next two years. OCBC and UOB recorded an increase in non-performing loans to 0.9 per cent and 1.3 per cent, respectively, in their third-quarter results last year. The banks are due to report their full-year results in the second half of February.
Even industrial property landlords have not been spared. Rental rates in Tuas and Jurong industrial areas - where many oil and gas-related players are based - have fallen by about 15-20 per cent since end last year as many companies trim and consolidate their operations, said a senior executive at an industrial Reit.
With the companies having just started to give up hope of an oil price rebound after attempting to wait it out for year, "it will continue to get worse", the executive said.
Other oil-related sectors have fared better, with the refining and chemicals industry growing 3.9 per cent, compared to the overall 5.2 per cent fall in Singapore's industrial production.
The sector comprises petroleum products, petrochemicals and specialty chemical products, which expanded by 8.4 per cent, 0.4 per cent and 7 per cent respectively.
Petroleum products have benefited from higher refining margins, while specialty chemicals are typically insulated from the volatility of the oil price, said IHS Chemical managing director Larry Tan. The insignificant impact on petrochemical product is "not surprising", he added, as producers on Jurong Island have enjoyed good margins in the past two years and have been running "flat out" to maximise their assets.
Manufacturing aside, oil imports and exports - which make up 19.3 per cent of Singapore's total trade - have recorded constant growth rates in volume terms, though overall import costs and export receipts have fallen in line with the lower oil price.
"There is no clear-cut relation (as that of benefiting from lower oil prices as a non-producer) for a major refiner like Singapore as a majority of the oil imported is re-exported either as refined petroleum or petrochemicals and speciality chemicals," said Mizuho's Mr Varathan.
As oil inventories rose, however, they would have provided a boost to the transport and storage sector, as well as wholesale trade sector, said Ms Fenner of Oxford Economics.
Looking ahead, depending on how much oil prices drop further, the benefits may be more limited compared to last year due to base effects.
Said Standard Chartered economist Jeff Ng: "How lower oil prices will affect Singapore this year will rely on how much year-on-year changes we see. There are low base effects from last year, which may limit the year-on-year changes. A significant rebound may reverse the impact seen in 2015."
On the other hand, a more optimistic view is that the positive impact of the lower oil prices could take more time to manifest than the negative impact.
The negative effects have been immediate, with oil-producing companies slashing capital spending and jobs, noted Manu Bhaskaran, co-founder of economic consultancy Centennial Asia. Consumers, on the other hand, would adjust their spending only after they were sure that the oil price fall was long lasting, he said.
"This year will be when the net benefits will be felt strongly - as the negative effects fade and the positive effects dominate," said Mr Bhaskaran. "Since Singapore is so driven by global demand, that should be positive."
READ MORE: BT Infographics: A growing ripple