Un­der­stand­ing the fuel price fluc­tu­a­tions

Fiji Sun - - EXPLAINER - Jy­oti Prat­i­bha Feed­back: jy­otip@fi­jisun.com.fj

Fuel prices in Fiji are re­viewed on a monthly ba­sis. The prices in Fiji are de­pen­dent on three key vari­ables fac­tors: the freight rates, ex­change rates and the world mar­ket price for re­fined oil (MOPS). All petroleum con­sumers were no­ti­fied that the whole­sale/re­tail prices for Mo­tor Spirit, Premix, Kerosene and Diesel de­creased for this month. The petroleum prices from 1 May to 31 May 2020 is mainly de­ter­mined by the move­ment of re­fined oil prices in the Sin­ga­pore mar­ket based on March 2020 av­er­age prices of the daily pub­lished Means of Platt’s Sin­ga­pore (MOPS) bench­mark prices. There was favourable move­ment in the in­ter­na­tional prices for Mo­tor Spirit, Premix, Kerosene and Diesel. There was un­favourable move­ment in the in­ter­na­tional prices for Mo­tor Spirit, Premix, Kerosene and Diesel since the last re­view pe­riod.

The ram­i­fi­ca­tions of the COVID-19 pan­demic were still the main driv­ing force, re­sult­ing in un­prece­dented world­wide oil de­mand shock and mas­sive sell-offs in the global oil mar­kets, amid a sig­nif­i­cant crude sur­plus in March 2020 which con­trib­uted to sig­nif­i­cant un­cer­tainty in crude oil mar­kets and the world econ­omy in gen­eral that had an im­pact on the lo­cal Fi­jian prices. Un­favourable move­ment in the in­ter­na­tional freight prices and the strength­en­ing of the US dol­lar was also noted.

The re­sult­ing ef­fect of move­ments has seen the fol­low­ing changes in fuel prices for May 2020 for the Fi­jian mar­ket (as in the ta­ble for­mat).

Oil Price

The Fiji Com­pe­ti­tion and Con­sumer Com­mis­sion noted that since Jan­uary 2020, in­ter­na­tion­ally the oil price de­clined fol­low­ing the ef­fect of COVID-19 due to over­sup­ply and re­duc­tion in de­mand due to lock­downs be­ing im­ple­mented by the Gov­ern­ments of coun­tries af­fected by the pan­demic. The cur­rent price re­vi­sions are at­trib­uted to the in­ter­na­tional mar­ket in­flu­ences. The May 2020 re­view pe­riod noted the fluc­tu­a­tion in the world petroleum prices for March 2020 in Fiji as Fiji fol­lows a month lag pe­riod to im­ple­ment the changes in world mar­ket price. The cur­rent prices when com­pared to the prices from the Year 2015 shows the fol­low­ing price changes (as in the ta­ble for­mat).

LPG:

The re­view pe­riod (March 2020) noted de­creases in the trad­ing prices, how­ever the US dol­lar strength­ened against FJD and in­ter­na­tional freight rates in­creased re­sult­ing in the price de­crease for all LPG prod­ucts.

The re­sult­ing ef­fect of move­ments has seen the fol­low­ing changes in LPG prices for the month of May 2020 for the Fi­jian mar­ket (as in the ta­ble for­mat).

Over­all, the monthly price of Bu­tane de­creased by 11.93 per cent for the month of March 2020 when com­pared with the pre­vi­ous re­view (USD545/tonne to USD480/tonne). It has been ob­served that the LPG prices fell since the bu­tane CPs recorded the sec­ond month of con­sec­u­tive de­cline due to coro­n­avirus out­break that con­tin­ued to curb China’s do­mes­tic LPG consumptio­n and im­port de­mand. China is the largest im­porter/buyer of the Mid­dle East­ern LPG and the travel lock­downs for pre­vent­ing spread of coro­n­avirus has led to over­sup­ply. Thus, prices have LPG prices dropped.

The strength­en­ing of the USD against FJD and in­crease in freight and han­dling charges, how­ever has un­favourable move­ment dur­ing March 2020, how­ever the de­cline in bu­tane price led to over­all de­cline in the do­mes­tic LPG price.

Changes in LPG prices for the month of May, 2020.

LPG Do­mes­tic Price Move­ment

Prices will vary out­side Viti Levu and Vanua Levu.

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