Oil price drop have not led to lower pump prices because of high hdb rents

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OIL PRICE DROP HAVE NOT LED TO LOWER PUMP PRICES BECAUSE OF HIGH HDB RENTS

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4 Dec 2014 - 11:40am








Oil prices have dropped sharply but pump prices are still not coming down because of high HDB rents.

Last week, the Monetary Authority of Singapore and the Ministry of Trade and Industry released statistics that showed that oil prices in Singapore have dropped to their lowest levels since 2010.

The OPEC Oil Price in October fell by 20.3 percent year-on-year, which is the largest fall this year.

September also saw a massive drop of 11.7 percent.

However, pump prices have continued to hold steady.

According to industry observers, this is because the intense "market competition" have caused rents to increase to sky-high levels.
The oil companies are required to bid for sites for petrol stations from the Housing and Development Board (HDB).

For example, in October this year, Shell made a bid for a 30-year lease site in Hougang and paid $53.4 million for the 3,700 square metre space.
Esso also paid $27 million for a 2,000 square metre 10-year lease site in Ang Mo Kio in May this year.

However, over the past 10 years, petrol station sites would cost about an average of $15 million for 10-year leases.
This would mean that the sites have increased in prices by nearly 100 percent.







Earlier this month, the International Monetary Fund Managing Director Christine Lagarde said that the drop in oil prices is a good thing for consumers and businesses.
However, this seems unlikely to be the case for consumers and businesses in Singapore.

Businesses have to pay exorbitant rents to the government whereas consumers have to put up with high prices because of the high rents that the government charges.

The Public Transport Council has also last month announced that a review of public transport fares which is widely expected to result in yet another increase in fares.

Questions have abound as to why transport fares are still increasing when oil prices have already dropped to their five year low.

Lagarde estimated that advanced economies will be able to an see additional 0.8 percent of growth this year because of the drop of oil prices.

However, for Singapore's case, even if there is an increase in economic growth, this would once again come at the expense of Singapore consumers and even businesses.

RELATED:
OIL PRICES HAVE FALLEN BUT TRANSPORT FARES STILL CONTINUE TO INCREASE
IMF: DROP IN OIL PRICES SHOULD BE GOOD FOR CONSUMERS AND BUSINESSES


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