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    Feb 25, 2015

    Motorists 'unlikely' to stop driving over petrol duty hike

    PETROL prices have risen following the Government's hike in duties, but motorists are unlikely to give up their rides, experts said.

    This is because the recent oil slump - where barrel prices hit a six-year low last month - has kept pump prices lower than usual and will help mitigate the tariff increase for now.

    Independent oil consultant Ong Eng Tong said that oil prices may recover in the next five years, when the shale oil supply from the United States drops.

    On Monday, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced during his Budget speech that the duty for premium grade petrol will increase by 20 cents to 64 cents a litre, while that for intermediate-grade petrol will go up by 15 cents to 56 cents per litre. The move is to discourage car usage and reduce carbon emissions.

    Pump operators reflected the higher duties within a day, with the most popular grade of petrol, 95-octane, now costing between $2.01 and $2.04 per litre before discount, up from $1.85 to $1.89.

    Premium grade petrol such as 98-octane now ranges from $2.20 a litre at the Singapore Petroleum Company, to $2.65 for Shell's V-Power, up from $1.99 to $2.40.

    SIM University's urban transport management expert Park Byung Joon said that the petrol duties are embedded in the pump prices, making such a hike less effective compared with other taxation measures to discourage people from driving.

    Other taxation systems like Electronic Road Pricing, for example, work as "constant reminders" about the high costs of driving, said Dr Park.

    Compared with the price of a new car (usually over $100,000), an increase of $6 to $8 a week in petrol is negligible, he added.

    But experts note that higher petrol duties may lead some drivers to look for alternatives to save money.

    Terence Fan from the Singapore Management University said: "It is conceivable that some motorists may downgrade their petrol choice to save costs."

    Drivers whom The Straits Times spoke to said they were unlikely to change their travel patterns.

    Bank executive Jay Lim, 37, said: "I'm not sure for what price I would leave the car at home, given (that) I've already sunk so much money to own it. But I'd be much more keen to try the alternative of public transport if it were less congested."