Singapore electricity tariff rates lowered by 25% from Jan 2009

This article belongs to the Singapore inflation watch story arc.

channelnewsasia.com :

Singapore households will pay 25% less for their electricity bills from Jan-Mar 2009. The Energy Market Authority (EMA) said because of the global downturn, fuel oil prices have fallen by as much as 40%. Households and small businesses will pay 24.54 cents per kilowatt hour. This is the first fall in electricity tariffs since April 2007.

Singapore's electricity rates are calculated using a formula pegged to fuel oil prices, reviewed every three months. A barrel of fuel oil was US$115 in Jul 2008, falling to US$63 in October. Fuel oil prices only account for 50% of the final tariff - power generation, delivery and other fees account for the rest. EMA said there's no guarantee that electricity tariffs will not go up after March 2009. It said that the best thing for Singaporeans to do is to practise energy saving habits such as switching off appliances when not in use.

- This mirrors the ongoing fall in NYMEX crude oil prices, falling from the $147.27 record in Jul 2008 all the way down below $60, $50, and then below $46 recently. While the oil markets continue to look for a bottom, consumers should continue to be cautious. This is no time to be celebrating lower oil or electricity prices as we head into what is looking more like a global economic collapse than just a severe recession.

NYMEX crude oil falls below $46 on deepening economic slowdown

news.yahoo.com :

Crude oil prices fell below $46 a barrel to its lowest in nearly four years on Thursday [4 Dec 2008], extending 4 consecutive days of falls as continued demand worries minimized bullish draws in US oil stocks. Oil prices have lost more than $100 a barrel since an all-time high of $147.27 hit in July, as demand is seen weakening worldwide and analysts expect it to contract this year and next. NYMEX crude oil prices for Jan 2008 delivery fell to $45.30, the lowest since a $44.60 low hit on 9 Feb 2005.

Worries about a deepening economic downturn resurfaced as a measure of the US service sector, which represents about 80% of US economic activity, slumped further than expected to a record low in November, according to the Institute of Supply Management. The Institute said its non-manufacturing index came in at 37.3 versus 44.4 in October. Adding to the gloom, US private employers cut 250,000 jobs in November, a 7-year high. Growing economic woes and falling prices have prompted OPEC to consider another round of production cuts to oil output when it next meets December 17 in Algeria.

- It looks like we are still playing the game of "How low will it go?" - but at these prices, it's a fair bet that a number of oil producers will have to start shutting down or go into negative profit margins. The tar sands operations are reputed to have operating costs of around $80 per barrel and in fact the oil sands companies have already shelved expansion plans. Even within OPEC itself, some member nations such as Iran and Venezuela are said to have operating costs as high as $70-80 per barrel, and both the Saudi king and Saudi oil minister are on record as saying that they seek a minimum $75 target price for crude oil. Expect fireworks ahead.

(2008-12-04 18:36:35 SGT) [Energy] Permalink

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