Power bills up from July

Household power bills will be higher next month as Singapore Power yesterday announced that electricity tariffs will be raised from next Tuesday.

Families living in a one-room HDB flat can expect their monthly electricity bill to go up by an average of $1.20.

Owners of five-room HDB flats can expect their power bills to rise by an average of $5.

The average bill sizes are worked out based on the new electricity tariffs, which go up by 1.19 cents per kilowatt-hour (kWh) for all households from the next quarter, starting July 1.

With the new tariff, electricity will cost 25.07 cents per kWh.

This is an increase of about 5 per cent over the 23.88 cents consumers are paying this quarter.

Singapore Power said the increase is due to the higher cost of electricity arising from higher fuel prices.

In the next quarter, tariffs are pegged to a higher forward fuel oil price of US$82.61 (S$113) per barrel.

This is about 11 per cent higher than US$74.40 per barrel in the current quarter.

The electricity tariff is reviewed quarterly and adjusted according to fluctuation in the cost of electricity.

Tariffs have been on the rise since July last year when they increased by 8.83 per cent.

The cost of electricity then was 20.52 cents per kWh.

Tariffs increased by 5.94 per cent and 5.7 per cent during the first and second quarters of this year.

Oil prices drop on signs of falling Asian demand

Oil prices fell more than US$2 yesterday.

The drop extended a slide from the previous session, amid growing signs that Asian demand could start to falter as countries look to cut subsidies by raising local fuel prices.

United States crude had fallen US$2.02 to US$126.83 a barrel by 0855 GMT (4.55pm in Singapore), after dropping US$3.34 on Tuesday, and taking losses from last week’s record high of US$135.09 to nearly 6 per cent.

Meanwhile, London Brent crude was down US$1.69 at US$126.62 a barrel.

Earlier yesterday, a research paper released by International Monetary Fund economist Noureddine Krichene stated that there was no reason to expect oil prices to decline soon.

The paper said ‘prudent monetary policy’ may be needed to stabilise the oil market. ‘Short-term forecasting would imply persistence of observed trends,’ it added.

‘Given explosive trends in prices of other commodities, depreciating currencies and weakening financial conditions, recent trends in oil prices might not persist further without triggering world economic recession.’

The decline came in the face of supply problems in Mexico and Nigeria that could have driven oil prices higher. That is an indication that demand concerns are weighing on the market and giving investors reason to pull back from the record-high oil prices, analysts said.

Oil has also been knocked off its peak by growing evidence that consumers are struggling to cope with surging prices.

Demand for oil in the US, the top consumer, and other developed countries has been under pressure, and signs are emerging that this trend could spread across Asia as governments in the region take the knife to subsidies.

‘There are signs that soaring energy prices are now starting to cause ripples even in the booming Asian economies,’ said Mr Edward Meir at MF Global.

Mr Michael Lynch, the president of Strategic Energy & Economic Research in Massachusetts, thinks that energy investors are selling because of recent data showing Americans are driving less as a result of high prices.

Pump prices up for second time in a week

Pump prices have risen for the second time this week and third time this month.

The latest jump – the 12th consecutive increase since last July – was sparked when oil giant Shell upped petrol prices by five cents a litre and diesel by seven cents at 5pm on Thursday. ExxonMobil and Caltex matched the move six hours later.

Singapore Petroleum Company was the latest to adjust its rates, at 10am yesterday.

The price spikes have come on the back of ever-soaring crude oil prices, which hit US$135 (S$184) a barrel this week. Some analysts predict oil could reach US$200 a barrel.

If that happens, motorists here would be looking at $3 for a litre of petrol, said oil industry analyst Ong Eng Tong.

Mr Ong is predicting that 95-octane will hit $2.50 by the year end. ‘It’s all due to the hedge funds,’ he said, blaming the price spiral on speculative trading in the commodity. ‘They’re predicting oil will hit US$200 a barrel. They’re the ones driving it up.’

The latest increases bring the price of a litre of 92-octane fuel to $2.153 before discount, 95-octane to $2.186 and 98-octane to $2.26. Ultra-premium grades are costlier. Caltex Platinum is going for $2.386 a litre, while Shell V-Power is retailing at $2.379.

The price of diesel, which has been rising more sharply than petrol prices, has hit $1.833 a litre. If not for the duty on petrol – around 44 cents a litre – diesel, which is not taxed, would cost more than 98-octane petrol. This is the case in many countries.

Rising petrol prices have raised annual fuel expenditure for each car owner by around $1,000 in just over a year. But the recent diesel hikes will have a more significant impact on businesses which rely on diesel-powered vehicles.

Cabby Tony Pang, 59, described the diesel price rise – 17 cents a litre in one week – as ‘quite sharp’. He uses about 25 litres of diesel a day, so the last two rounds of adjustment would add $1,530 to his annual fuel bill. Multiply that by the 24,000 taxis here and the impact would be $36.7 million a year.

To add to his woes, Mr Pang said he has noticed a drop in passenger numbers since additional train services were added this week. SMRT started to roll out 700 extra train trips from Tuesday, mainly during lunch time.

Mr V.S. Kumar, 44, managing director of home-grown delivery company Network Express, said his diesel expenditure per week would rise from $250 to $350.

‘Diesel today costs as much as petrol a year ago. It’s very bad, very bad,’ he said with a sigh.

Price above US$135 on supply worries

Oil galloped to a high above US$135 a barrel yesterday, extending this month’s near 20 per cent rally after a sharp drop in US crude stocks and the weakening greenback triggered buying by investors.

The climb in prices, which have marked new record highs in 10 of the last 14 sessions, has set off alarm bells around the world, although the Organisation of Petroleum Exporting Countries has maintained that the market remains well supplied with crude and that prices are beyond its control.

The US July crude contract extended Wednesday’s more than US$4 surge to reach a high of US$135.04 early yesterday. By 0729 GMT (3.29pm Singapore time), it was trading up US$1.17 at US$134.34 a barrel.

US crude stocks fell 5.4 million barrels to 320.4 million barrels last week, counter to expectations of a small rise in inventories, intensifying concerns about supplies at the world’s biggest consumer just ahead of the start of summer.

Several analysts said the latest step higher in prices had come after companies or traders who sold the market short scrambled to buy back their positions.

Recent bearishness towards the US dollar added momentum to the oil market. The greenback was pinned at one-month lows against the euro after the Federal Reserve cut its growth forecasts for this year.

Petrol, diesel price hike

Pump prices are up again.

Caltex and Singapore Petroleum Company (SPC) yesterday raised the price of petrol by two cents a litre, and diesel by 10 cents a litre, setting new record highs. The increase is the fourth since last month and the 10th consecutive climb since July last year.

It brings a litre of petrol as high as $2.33 and diesel to $1.76 at Caltex, operated by United States oil giant Chevron. At SPC, petrol has gone up as high as $2.21 a litre while diesel hit $1.76.

The other oil companies with petrol stations here – Shell and ExxonMobil – are expected to follow suit as oil prices closed above US$125 (S$173) a barrel last week.