Retail fuel prices are ticking back up following a sorely needed moderation witnessed in November-December, as filling station owners report sharp declines in sales.
Economists have attributed the price hike to a surge in global oil and gas stocks into the new year, and ramped-up fuel demand in the manufacturing sector, especially from China following reports of an ebb in the Covid-19 threat in the East Asian country.
The retail selling price of fuel in the Kingdom from January 16-31 has been set at 4,350 riel or $1.07 per litre of regular EA92 – petrol with an octane rating of at least 92 – and 4,050 riel or $0.99 per litre of diesel, the Ministry of Commerce said in a notice that contains values in both currencies.
The corresponding rates for January 1-15 were 4,200 riel ($1.03) and 3,800 riel ($0.94) per litre of regular EA92 and diesel, respectively. They had been set at 4,100 riel ($1.00) and 3,750 riel ($0.92) for December 16-31, bottoming out at 9.89 and 8.54 per cent lower – in terms of the local currency – than a peak of 4,550 riel ($1.11) and 4,100 riel ($1.01) in November 1-15.
Compulsory for licensed filling stations – although usually not strictly enforced for street vendors, the pricing serves as a tool to facilitate and enhance cost control nationwide and is calculated semi-monthly by the ministry, using data extrapolated from fluctuations in crude oil prices on the international market.
Royal Academy of Cambodia economics researcher Ky Sereyvath ascribed the resurgence in retail fuel rates to, inter alia, the oil producing cartel Organisation of the Petroleum Exporting Countries’ (Opec) decision to keep a tight lid on output, and the subsequent supply shortages.
He also cited a contraction in the crude alternatives market and the environmental devastation in Sri Lanka last year wrought by an oil spill from a cargo ship.
“The price of fuel may swing up or down based on supply and demand, but it also leans on the developments that affect the US currency,” he told The Post.
Seun Nith, owner of PTT Prek Kampoes filling station in southern Phnom Penh’s Dangkor district, told The Post that more people had been moving freely again as last year’s main coronavirus wave receded, driving a recovery in fuel sales.
He pinned the upturn in fuel prices on the rising international crude oil prices, but ruled out a significant contribution from the Lunar New Year, which he said ethnic Chinese populations are preparing to celebrate.
Falling on February 1 this year, the Lunar New Year marks the beginning and first new moon of a calendar year whose months are lunar cycles, and is based on lunisolar observation.
Similar calendrical systems are used in China – from which the Cambodian one is derived, as well as Vietnam, South Korea, Japan and other countries, and by populations around the world.
Nith went on to say that the last couple of fuel price hikes have resulted in a marked drop in business at his filling station. At the current rate, monthly sales would reach just 80,000 litres, he rued.
Still, he expects sales to pick up during the upcoming holiday season, predicting that transactions would notch up a 62.5 per cent jump from the current level.
Ty To, owner of a Caltex filling station on National Road 20 – also known as Chamkar Doung Street or the southern portion of Street 217 – in the same district, said fuel sales at his facility had dipped by 30 per cent from what he suggested would be the norm. The current level translates to 70,000 litres per month in sales, he said.
He blamed the downbeat sales on a general reduction in unnecessary travel that he said was due to the rising fuel costs.
Fuel sales had been steadily rising into end-2021, especially after the government dialled back a raft of Covid-related restrictions, which allowed for leisure travel to resume in a meaningful way, according to To.
“But the rise in fuel prices was accompanied by a decline in sales, because when rates for petrol go up like this, people won’t travel much,” he pointed out.
Global crude oil prices had shot up considerably in the past month, taking benchmarks to seven-year highs at just below the $90 per barrel mark, before posting slim losses in January 20-21.
On Friday, January 21, North Sea Brent futures for March delivery dipped $0.49 or 0.55 per cent to settle at $87.89 a barrel, while US West Texas Intermediate (WTI) crude for February delivery fell $0.41 or 0.48 per cent to settle at $85.14.
Both Brent and WTI on January 19 reached their highest levels since October 2014, at $89.17 and $87.91 a barrel, respectively.
The ministry notice shows that the current semi-monthly regular EA92 rate was computed by adding the $0.5836 average Means of Platts Singapore (MOPS) over January 3-14, $0.1847 in taxes and associated charges ($0.0635 in customs duty, $0.0200 in additional fees and $0.1013 in special fees) and $0.20 premium – summing up to about $0.968 – plus an extra 10 per cent surcharge on top of that for a total of $1.0652 or 4,339 riel (accounting for rounding), which were then adjusted to their final values.
Similarly, the diesel rate was formulated from a $0.5962 mean MOPS (over the same 12-day period), $0.0742 in taxes and associated charges ($0.0000 in customs duty, $0.0400 in additional fees and $0.0342 in special fees) and $0.23 premium – tallying up to around $0.900 – with a 10 per cent fuel surcharge for a sum of $0.9904 or 4,035 riel, which were then rounded to their current values.
And as has been customary since 2018, the notice mentioned that the two current per-litre rates include a $0.04 reduction greenlit by Prime Minister Hun Sen “to ease the people’s livelihoods”.