Koya outlines reasons for increase
15 January, 2018, 12:00 am
FIJI is directly impacted by the world market prices for both refined oils and liquefied petroleum gas (LPG) and any changes to it will be reflected in the local prices.
This was made clear by the Minister for Industry, Trade and Tourism Faiyaz Koya while announcing the new prices of unleaded petrol, premix, kerosene, diesel and LPG products on Saturday.
According to Mr Koya, the new fuel prices effective from today were mainly determined by unfavourable movement in the international prices for all petroleum products experienced in the last quarter.
“Crude oil prices traded at the highest levels in more than two years, for the months of November and early December 2017,” Mr Koya said.
“This was triggered by the OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producing countries continued to conform with oil production cuts, which is extended to the end of this year and the northern hemisphere countries approaching winter.
“The increases in crude oil prices were also supported by rising global demand as China and India continue to see positive growth rates. Hence, the high demand for crude oil and production cuts has led to the increase in prices.”
Mr Koya added that the new LPG price rise was significantly impacted by the increase in the international butane prices based on the Saudi Aramco Contract prices.
“The prices were affected by the strengthening of the US dollar that has led the international freight rates to increase, resulting in price increase for all LPG products,” he said.
Elaborating further on this, Fijian Competition and Consumer Commission chief executive officer Joel Abraham said January period usually noted increases in fuel prices.
“When you look at fuel prices, it is cyclical. Over time, you would note that in the January price change, there is usually an increase,” Mr Abraham told this newspaper.
“This is just because there is a huge demand in the Northern Hemisphere as they are going into winter. So there’s a lot of demand for fuel oil.
“Some geopolitical tensions that have been experienced at the global scale, that brings some degree of uncertainty and then you have people who are continually trying to buy more fuel oil, given that fuel oil is a very essential commodity.”
With Fiji being a price taker, the country cannot control fluctuations in global fuel markets, but sensible and consistent policy decisions has managed to ensure price stability.
This is why fuel and LPG prices are reviewed every quarter, as opposed to every month, to maintain price stability.
It also enables consumers to plan their consumption better and will remove shocks as a result of continuous price fluctuations.
“You will see that this price increase is quite high, and of course we had no choice, we reviewed it and thoroughly looked at it and at the end we noted that yes the increase was justified,” Mr Abraham said.
“We are price takers as a small island country, and we are dependent on global fuel oil prices. So if globally the fuel oil price has increased, then we have to take it.”
Meanwhile, Mr Abraham has called on Fijians to seriously consider consuming energy wisely.