Oil price on the world market has crashed 73% since mid 2014 but petrol prices in Fiji, over the same period, have not reflected this massive reduction.
In January, the world price of oil plummeted to a low of $US30 a barrel – the biggest decline in 20 years – compared to $US110 a barrel in June 2014.
In Fiji where fuel prices are controlled by the Commerce Commission, motorists were paying $2.63 a litre for gasoline (unleaded) in mid June 2014. In January 2016, the price dropped to $1.90 a litre.
This decline includes the 6% VAT reduction from the 1st of January which comes to about 10-11c per litre. Thus the drop in actual fuel price was a mere 9c a litre making the cost of motor spirit $2.02 per litre (before the 6% VAT reduction).
Compared to the 73% crash in world price between June 2014 and January 2016 – our price decline over this period was around 25% (motor spirits).
Questions sent to the Commerce Commission to explain why Fiji motorists were not benefitting from the massive fall in oil price on the world market, were not answered. The Commission said it will put out a statement in July 2016.
Six months to wait for an explanation from the Commerce Commission?
We also believe that the profit margin allowed by the Commerce Commission to oil companies and retail outlets (service stations) maybe quite high. Thus pushing up pump prices. Attempts in the past to get the Commission to disclose the margin have not been successful.
While it is perhaps unreasonable to expect fuel prices to fall by the same percentage as that applicable to oil prices ie 73% over the period June 2014- January 2016, it is not unreasonable to expect a reduction of at least 50%, conceding the difference of 23% to offset factors such as refining, shipping and associated costs.
On that basis we say that there is a strong case for a further sizeable fall in fuel prices.
We call on the Commerce Commission to undertake an immediate review and not wait until July 2016 to give us an explanation.
We call for action now, not five months later.