SUNBIZ

Price Restatement For Petroleum And LPG

Why Price Regulation for Petroleum and Liquefied Petroleum Gas (LPG)? Price Regulation is used to protect the interests of consumers when free market mechanisms are not able to correct itself.
31 Jul 2017 11:00
Price Restatement For Petroleum And LPG

Why Price Regulation for Petroleum and Liquefied Petroleum Gas (LPG)?

Price Regulation is used to protect the interests of consumers when free market mechanisms are not able to correct itself. LPG, Diesel, Premix, Motor Spirit and Kerosene have become very important products for the economic and social wellbeing of Fijians.

These products are used as energy sources by the Fijians.

LPG and petroleum products are widely used in several means of transport, commercial and agricultural sectors and residential applications including cooking and hot water systems.

 

What Determines the Local Fuel and LPG prices?

Oil is often perceived as a necessary and highly addictive energy commodity for the global economy.

Both oil-consuming and oil-supplying countries are economically dependent on oil.

Therefore, any change in the oil price is prone to affect both sides of the market.

Moreover, because the oil market can be viewed as a global and liquid market, the world market price for oil is the reference price for many market participants.

This implies that many non-oil but oil-related markets are interlinked. A change in one of them is therefore likely to affect the others.

The oil market’s dynamics have the tendency to change dramatically due to technological changes and political events, resulting in price fluctuations affecting the entire world economy.

Fiji is a price taker to world market prices for both refined oils and butane.

There is a close relationship between international fuel prices and Fijian wholesale and retail fuel prices. Fiji’s regional market for petroleum products is the Asia–Pacific market. Singapore prices are the key pricing benchmarks for Fiji, because Singapore represents the competitive source of supply for Fiji.

Growth in demand for fuel in Fiji will continue to be largely met by imports in the future, further strengthening the price relationship.

The price of LPG in Asia-Pacific is linked to a monthly price set by the main exporter of LPG to the region, Saudi Arabia.

This price is known as the Saudi Contract Price (Saudi CP) and is set for propane and butane.

 

Changes in the prices of fuel and LPG affect the global economy in a variety of channels, including but not limited to the following:

  • There will be a rise in the cost of production of goods and services in the economy, given the increase in the relative price of energy inputs, putting pressure on profit margins;
  • There will be an impact on the price level and on inflation. Its magnitude will depend on the degree of monetary tightening and the extent to which consumers seek to offset the decline in their real incomes through higher wage increases, and producers seek to restore profit margins; and
  • There will be both direct and indirect impact on financial markets. Actual as well as anticipated changes in economic activity, corporate earnings, inflation, and monetary policy following the price changes will affect equity and bond valuations, and currency exchange rates.

 

Price Restatement of Fuel and LPG

The Fiji Commerce Commission is tasked with regulating the wholesale and retail prices for Petroleum products and LPG.

Under the current regulatory framework, quarterly price restatements are issued in  view of price fluctuations in the world market price.

The Commission also fixes and declares the prices throughout the Fijian economy into six (6) schedules for regulated petroleum products and four (4) schedules for LPG depending on the geographical spread of urban and rural areas.

The prices set out in each specified schedule are the maximum retail and wholesale prices, as the case may be, at which the goods mentioned therein may be sold in the area so specified in the schedule.

Where specified quantities in each schedules are not available or a new quantity is introduced in the market, proportionate prices must be applied to all other quantities.

Source: Fiji Commerce Commission 

Fijisun E-edition
Advertise with fijisun
Subscribe-to-Newspaper
Fiji Sun Instagram
Fiji Plus
Subscribe-to-Newspaper
error: