Are You Being Ripped Off At The Petrol Station?

Esso by Esteban

23 Dec Are You Being Ripped Off At The Petrol Station?

Crude Oil Prices in 2015, declined from US$54 to US$35 per barrel.

Crude Oil Prices in 2015, declined from US$54 to US$35 per barrel. Chart from

This is the price trend of SPC petrol prices in 2015. My pump price has actually increased from S$1.87 to S$1.96! Screenshot of, visit the site for price data of other companies.

This is the price trend of SPC petrol prices in 2015. My pump price has actually increased from S$1.87 to S$1.96! Screenshot of, visit the site for price data of other companies.

Oil prices declined 35% while my pump price increased 5%!

Okay, to be fair, Jan 2015 was a 6-year low for pump price based on this report. But then again, the crude oil prices have dropped so much and the current pump prices aren’t convincing. Consumers did not seem to enjoy the cheaper crude oil prices.

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Breaking Down the Costs

Let’s use RON95 grade since I pump that, which works out to be S$1.98/litre at Esso.

According to Exxonmobil, the costs could be broken down into the following 5 factors.

1) Internationally-traded wholesale fuel prices

We have established that the wholesale fuel prices have declined 35%.

One barrel of crude oil is equivalent to 159 litres. Hence, one litre of crude oil on 1 Jan 2015 would be US$54/159 = US$0.34, and it would have cost US$0.21 on 22 Dec 2015.

2) Excise duties and GST

“The petrol excise duty in Singapore is set at a rate of $0.56 per litre for 92- and 95-octane petrol, and $0.64 per litre for petrol rated 97-octane and above. As with all other products, there is the additional seven per cent GST charge.”

This information was pulled from Exxonmobil’s website.

3) Currency Exchange Rate


Indeed, the USD has strengthened against the SGD in 2015. Since crude oil is traded in USD, a strengthening in USD would require more SGD to purchase crude oil. USDSGD has went up by 6%.

We can adjust the crude oil in SGD per litre, which we will use numbers from (1).

On 1 Jan 2015, one litre of crude oil would cost US$0.34 x 1.325 = S$0.45; and

On 22 Dec 2015 one litre of crude oil would cost US$0.21 x 1.405 = S$0.30.

Despite the strengthening in USD, the crude oil price had dropped 33% even if it was priced in SGD.

4) Operating and capital cost

This would be the land, equipment, staff, maintenance, operation, marketing and promotion costs. I could not find any published operating costs of petrol kiosks. The financial statements reported the selling and administrative costs without the breakdown which is not useful for this case, because it would have included costs of corporate sales and other overheads not related to the running of petrol kiosks.

It is also difficult to find the profit margin at the petrol kiosks because Exxonmobil grouped the earnings as downstream operations, which would include the sale of aviation fuel and lubricants.

A clue was given by an image on Exxonmobil’s website:

If wholesale fuel prices take up half of the total costs, and excise duties and GST about one third, that would leave about one-fifth of operating costs.

But I suspect the image is quite old as the wholesale fuel price is currently lower than the tax. The tax should be more stable so we would use it to proxy the operating cost, which is = 1/5 x S$0.56 x 3 = S$0.34

5) Competition

In fact for RON95, Esso is the second priciest at S$1.98, after Shell at S$1.99. Caltex and SPC are offering S$1.96. I guess Exxonmobil meant that they could not deviate from the competitors’ prices by too much. Are they a cartel?

I have found a study by Competition Commission of Singapore (CCS) dated 2011, which mentioned that there were no evidence of price fixing among the petroleum companies.


At the end of 2015, the estimated costs of delivering one litre of RON95 petrol for retail consumers are

  • Internationally-traded wholesale fuel prices = S$0.30
  • Excise duties = S$0.56
  • GST = S$0.10
  • Operating and capital costs (eg, land cost) = S$0.34
  • Total cost = S$1.30
  • Pump price = S$1.98
  • Profit = S$0.68
  • Profit margin = 34%

The bulk of the profit margin came about from lower crude oil prices. If the crude oil price soars, their profit margin would decrease.

In the CCS report mentioned earlier, I found a useful chart where both crude oil prices and retail pump prices were plotted together over a longer period of time.

Crude Oil vs Retail Pump

It showed that retail pump prices are a lot more stable than crude oil prices. To be fair to the petroleum companies, they are doing a good job delivering stable prices to consumers and handle the volatility in crude prices internally.

My understanding is that upstream (exploration) business benefits from high crude oil prices, and downstream (refinery and end products) business benefits from low crude oil prices. So it isn’t true that low oil price hurt the petroleum companies entirely. Most petroleum companies are vertically integrated with both upstream and downstream. This allow them to ride the volatility of crude oil prices and able to deliver stable pump prices to consumers.

*Added in GST in the calculation which was missed out previously.


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  • Tacomob
    Posted at 11:31h, 23 December Reply

    Hi Alvin,
    Thank you for shedding some light on the magics of petrol prices. My wife was always wondering why the prices do not drop further despite the ever lower crude oil prices. I explained to her that many other factors go into the fuel price. Now I have all the details.
    By the way, gov’ment hiked the excise duties on 23rd of February by 15 cents and 20 cents for higher octane fuel respectively (very much visible in your SPC-chart above). Taking this into account the pump prices would not have increased but dropped a bit over the year (not much though). So it is not only the ‘bad oil companies’ but also the gov’ment who help themselves to some coins from our purses.

    • Alvin Chow
      Posted at 10:03h, 25 December Reply

      Thanks Tacomob for your info. It was indeed that the petroleum companies raised prices following the Singapore Budget, likely a response to preserve their profit margin due to the higher excise duties.

      I have checked the figures and they were based on the latest excise duties.

      You are also probably right that the Government see a good time to raise duties when oil prices are low.

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