Singapore petrol prices increase second time in 10 days, up 14 times in past year

This article belongs to the Singapore inflation watch story arc.

today weekend (newspaper) :

Just days after they were last raised, pump prices continued their upward spiral on Friday [4 Jul 2008] - at around 4pm, Shell raised petrol and diesel prices by 5 cents and 10 cents, respectively, the 14th consecutive hike since last July. The other retailers - Caltex, Mobil and SPC are expected to follow suit shortly with similar hikes.

- And here we go again. Closely following on the heels of recent crude oil price records and a recent petrol price increase just 10 days earlier, Singapore petrol pump prices are also setting records of their own. RON92 petrol is now $2.253 per litre, RON95 is now $2.286 and RON98 is now $2.360. But the attention grabber really ought to be the diesel price, which has finally breached the $2.00 per litre level just like I said it would, and is now going for $2.033 per litre.

This is highly significant because diesel is used in nearly all commercial vehicles - buses to fetch people to school, work and home, trucks, lorries and vans to transport all kinds of goods, including, most critically, food, and construction vehicles that both maintain and build up the country's infrastructure. Increasing diesel prices will continue to drive price inflation, which will continue to rip through the economy. Inflation in Singapore is going to get worse. But that is what most people ought to know already.

What you may not know, however, is that there is a worldwide diesel shortage going on at the moment. US refineries are fully maxed out and are unable to churn out more gasoline and diesel to meet demand, and America is thus going out into the global markets to import millions of barrels per day of both gasoline and diesel ... and so is China, recovering from the Shandong earthquake as well as preparing for the 2008 Beijing Olympics. Given this background, it would then be no surprise that diesel prices have gone up faster than petrol prices have, and twice in a row. In both of these two most recent price revisions, it has been diesel going up 10 cents and petrol up 5 cents. Singapore is just another small country caught up in the middle of a global bidding war between giants - just a sneak preview of the massive LNG bidding war to come just as Singapore is to complete its LNG terminal - and that's a story for another time.

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