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Why is Hong Kong’s petrol worth the very best all over the world?


Based on the most recent “Worldwide Price of Residing (WCOL)” report printed by the Economist Intelligence Unit (EIU), though Hong Kong’s price of dwelling rating has dropped to the fifth place, the oil worth per litre tops the world once more. In reality, even in April 2020, when the worldwide oil worth dropped to the detrimental vary, the native oil worth was nonetheless utterly unaffected. In as we speak’s Kwiksure function, we’ll analyze the explanations behind the excessive oil costs in Hong Kong.

How costly is oil in Hong Kong?

On the time of writing, petrol in Hong Kong was USD? $2.50 per litre, up by about 14% from final yr’s USD? $2.19. Town with the second highest petrol worth is Amsterdam, at USD $2.18 per litre, considerably decrease than Hong Kong by 14%.

Supply of Hong Kong’s petrol is, surprisingly, Singapore

All native refined oil merchandise come from Singapore. The petrol produced is then transported to Hong Kong by oil vans and saved within the oil depot in Tsing Yi, as a result of the transportation price of cruise ships is greater than that of land. Because of the excessive lease of oil depots, there are solely 4 oil corporations in Hong Kong that import petrol from Singapore, specifically Shell, Caltex, Sinopec, and Esso. Each PetroChina and Feoso Oil purchase refined petroleum merchandise from these 4 oil corporations.

As well as, the price of opening a gasoline station is dear as a result of the land worth in Hong Kong is sky-high, and the “land” auctioned to grease corporations is merely the appropriate to make use of for 21 years, as a substitute of precise possession.


Petrol costs are usually not solely affected by the price of oil

About 22% of every litre of petrol in Hong Kong goes to the manufacturing? price, about 33% goes to taxes (as a result of the federal government regards gasoline as a luxurious merchandise, and has imposed a gasoline tax of USD $6.06 per litre of unleaded petrol since 1997), and about 43% is the gross revenue of oil corporations. Subsequently, adjustments in worldwide oil costs can solely have an effect on the price of oil, and have a restricted affect on the general worth.


Oil corporations refuse to introduce cheaper petrol varieties

Solely three kinds of gasoline, 98-octane commonplace unleaded petrol, 98-octane premium unleaded petrol, and one diesel, are at present obtainable in Hong Kong. Cheaper alternate options like 92- and 95-octane petrol choices are usually not obtainable.

Former Chairlady of the Competitors Fee Anna Wu stated she was notably sad with the federal government’s clarification for its refusal to mandate that oil corporations reintroduce the cheaper 95-octane petrol, because it gives customers a less expensive various. The federal government has refused to reintroduce this various gasoline despite the fact that motor gasoline reviews from different nations present that greater than half of the drivers select to make use of 95-octane petrol, which is 15% cheaper than 98-. Though in 1991, each 95- and 98-octane unleaded petrol have been obtainable in Hong Kong, all oil corporations determined to withdraw 95-octane unleaded petrol from the market in lower than a yr of gross sales. Retailers have stated prior to now that their choice to solely promote 98-octane petrol mirrored buyer desire. The federal government selected “to not intrude with the gasoline trade” on the grounds of sustaining a “free market”.

“Larger improve, decrease lower ” and “Quicker improve, slower lower”

As well as, analysts identified that neither the Competitors Fee nor the Shopper Council might discover proof that the 4 corporations “colluded in setting costs” (that’s, as soon as one oil firm adjusts the value, the opposite oil corporations will comply with inside a day or two). They might at most name it “parallel pricing”. It’s as a result of oil corporations supply reductions on gasoline playing cards, fleet playing cards, and limited-time reductions, inflicting the ultimate worth paid by completely different customers to be completely different. However it’s not tough to discover a worth development of “greater improve, decrease low cost” and “sooner improve, slower lower”. Structural issues have all the time existed in Hong Kong’s oil market, but the federal government has not adjusted its insurance policies to manage the revenue mannequin of oil corporations.

“Larger improve, decrease lower”

Based on the Shopper Council’s “Auto-fuel Worth Monitoring Evaluation 2020”, evaluating the cumulative improve or lower in petrol and Brent crude oil costs within the 7 years between 2013 and the primary quarter of 2020, when the oil worth dropped, the petrol worth additionally dropped however the magnitude was smaller by USD? $2.4. When the oil worth elevated, the petrol worth additionally elevated however the magnitude was bigger by USD? $1.99.

Contact Kwiksure in your insurance coverage options

Kwiksure has over 20 years of expertise within the automotive insurance coverage trade. Along with automotive insurance coverage (third celebration and complete), we additionally present house insurance coverage, motorbike insurance coverage, Voluntary Well being Insurance coverage Scheme (VHIS), Hong Kong-Zhuhai-Macao Bridge (HZMB) insurance coverage, and many extra

Use our on-line citation device now to get a free automotive insurance coverage quote! Alternatively, contact our staff of insurance coverage advisors for a free plan comparability and neutral recommendation as we speak. 



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