Transcription
There we go. All right. Ordinarily, a full tank my car will cost about around $130. So, let's see how much it costs today. And today, it's cost me around $155.
Globally, oil prices have surged by over 40% since the war began. And that has pushed petrol prices in Singapore to record highs. In just 8 weeks, pump prices have gone up an average of roughly 20% across all grades of petrol. All right. Thank you.
So, in a two-part special for Talking Point, we're looking at the energy crisis. And in this first episode, we're looking at the cost of fuel. Because when fuel prices go up, well, so does the cost of moving just about anything. people, food, goods, deliveries. The question is, how much more is it going to cost us? And how secure are we really? I'm going to give you an update, but let's do it the way everyone consumes it.
28th February 2026, the US and Israel decide to launch joint air strikes on Iran, citing it as a growing nuclear threat. Iran hits back by shutting the straight of Hormuzut. Now, where exactly is that? Right here. It's a very narrow waterway, yet also one of the most important oil routes in the world. About 20% of global oil passes through it from the Persian Gulf to the Indian Ocean and beyond. An estimated 80% of crude supply through that route is bound for Asia. And that is why Asia is being hit the hardest. And even if governments can pay, they may not get enough supply. So what now? As of 26th April, the street of Hongut is still far from operating normally with shipping traffic still severely disrupted.
As a driver, I'm paying about 20% more for my petrol. If you compare that to a similar mode of transport, let's say a private higher vehicle, well, the flat fuel sir charge for that has almost doubled because of rising fuel costs. But here's the thing, drivers like me don't get any kind of subsidies. But for the private higher vehicle drivers and cabies, they got a one-off $200 cash payout from the government back in April. On top of that, taxi companies and private higher vehicle platforms have also issued fuel discount vouchers to their drivers. So why are we still paying more?
This is Norman Tin. He has been a private hire driver for over 3 years.
>> Hey Norman.
>> Hello.
>> Hi.
>> Good afternoon.
>> Okay, let's go for a drive.
>> Let's go.
>> Why are prices still going up whenever I book my Grab?
>> Well, the $200 probably only offsets a month or even less of a driver's overall fuel cost uh increase. Yeah, for us drivers, sometimes $200 could be what we use in a day and a half.
>> It doesn't go a very long way.
>> But from what I know, you guys also get subsidized fuel, right?
>> Yes, we do.
>> How does that work?
>> So, for me, it's about a 30% discount. Uh and I think most drivers do get about the same range of discounts from the taxi companies or apps.
>> Okay. So that's pretty good in the sense that there are some discounts given.
>> Yeah. But the discounts don't shield you from the overall cost uh increase in pricing, right? If the cost goes up for everybody, so does it for us drivers and more so because we spend a lot more time on the road.
>> So the subsidy remains the same regardless of how much petrol actually costs.
>> Yes. I see.
>> So I understand there's now an increase in the passenger fuel search charge per trip is like around 90 cents now, right?
>> For drivers like me, maybe premium hybrid drivers, it does help to offset the cost. It matches the cost in the fuel increase because on average I my fairs are higher.
>> Okay.
>> Right. But if you're talking about the standard sedan drivers, their net revenue would be significantly lower.
>> So let's say the situation continues. You know how how do you think drivers are going to cope?
>> Well, one thing they can do which is obvious is to drive more, right?
There's a group of drivers for whom the option of just driving more isn't available. School bus operators can't choose their hours, platforms, or routes, and most of them run on diesel. Diesel prices in Singapore have surged far more than petrol by about three times as much. So why the spike? There's the obvious reason. Hormuds is choked and Gulf crude isn't getting through. But here's what makes the situation for diesel worse than petrol. Most Asian refineries are built to extract maximum diesel from Gulf crude. Now that that crude oil supply is curtailed, we can't get as much yield from other oil supplies. Meanwhile, diesel users, truckers, bus operators, construction crews simply can't cut back the way drivers can. Put it all together, and diesel prices react sharply when the system is under stress.
There are about 6,000 bus drivers in Singapore. In April, the government stepped in to provide financial support equivalent to 13% of fair revenues for three months to cushion the impact of rising diesel costs. Edund hires 60 school bus drivers all responsible for getting 2,000 kids to school every morning.
>> I would recommend to mo about 30 to 40% increase for the adjustment of the bus. So in terms of 13 30% is still challenging.
>> In other words, your actual cost increase is about 30 to 40%.
>> Yes.
>> But the subsidy is now only 13%.
>> So there's still at least another like 20 25% that that is not covered.
>> Yes, exactly.
>> The students bus fair.
>> Yeah.
>> Have you thought of increasing the the price?
>> We can pass a search char. But the things that if we increase some palace will maybe will be redraw taking the school bus. Oh.
>> So the bus will not fully occupied. We also affected. So how do you think bus operators are going to survive that?
>> All the bus ventor they are suffering this period. Some of the bus company maybe they will need to look for business loan to sustain their running cost. OM operator is a single operator. They might quit this industry at this period because they cannot survive.
>> What will really help you guys during this time?
>> I hope government they can step in to helping us like like co period to sustain our operation. For example, the way of foreign debit tax, some of the parking or ERP and diesel fuel tax.
Since the USIsraeli strikes on Iran began on the 28th of February, petrol is up around 20%. Prices of retail diesel went up to 75%. But the most dramatic increase is jet fuel going up a whopping 138%. Why have jet fuel prices surged so much? Well, it's scarcer than diesel. It's harder to produce due to strict standards, and it's barely stockpiled. Fair increases, though, have been varied. This is one reason why anyone who travels knows this. You're looking at the exchange rate thinking, "Should I change now or should I wait?" Now, for some travelers, they rather lock in the rate while they think it's still good. Can I have a $100, please?
>> $128, sir.
>> $128. Here you go.
So, that's exactly what airlines do with jet fuel. They lock in prices months or even years ahead. It's called hedging. Okay, thank you. So, if a few prices remain low, well, they've made a bad bet. But if few prices surge, they protected themselves from the worst of the shock. Which airline made the right hedge? To clue me in is Shuko Yusf.
>> I think it's very important to differentiate between what you hedge. Are you hedging crude or are you hedging jet fuel? Many airlines have hedged crude. For example, the cafe a pacific they hedge crude instead of jet fuel. So at the end of the day when you are hedging crude you're still at a loss because you need to refine those that crude into jet fuel. So whatever it is then the cost will multiply again. So you end up at a loss. That's different from some of the airlines some of the savvier ones in Europe. Singapore Airlines, they had some jet fuel. So when you into jet fuel, you lift it as jet fuel. So you don't have to refine, go through all the processes and and add on more money towards that. The cost to refine crude into jet fuels have gone up. Previously, it was $20 before February 28th. We're looking at more than $100 today.
>> A lot of tickets have been bought already. If you had paid for it in January or February, intending to travel for the June school holidays, for example, then you would have paid a lot lot less. The airlines are losing money when they fly you this coming summer in June because their operational costs have gone up exponentially
>> compared to the tickets that they sold to you in January.
>> They didn't expect jet fuel to
>> Yeah. Nobody did, right? Yeah. So you're in a lucky position having paid for that amount of typically now on any given flight anywhere around the world's fairs increased by about 30 40% depending on which class uh you're sitting in.
Just about everything we buy in Singapore is imported and came in either on a ship, a truck or a plane. And the cost of those modes of transport, well, it's gone up compared to 8 weeks ago before the war began. And those costs, well, it's starting to hit the everyday items we buy. Singapore's largest supermarket retailer, Fair Price, has said that it will freeze the prices of essential goods till the end of May, but retailers are already feeling the pinch. I want to find out which food items are most affected.
This is Ritman by Punat. Most Singaporeans know it as a grocery store, but it's also a major food wholesaler, meaning price changes here can affect prices in restaurants and cafes.
>> When it comes to all the stuff you have, which area has been hardest hit?
>> I think for us definitely the airflown products.
>> Ah, air freight prices for example this have gone up anywhere from two times to four times. So on top of oil prices rising, supply for air freight has just really really dropped for us. Uh what we've seen is that you know a lot of the Gulf carriers like Emirates or their schedules have severely dropped. What you can expect to see um is these cheeses will start increasing anywhere from 15 to 20%. Wow. So sunflower oil um what a lot of people don't know is that in many countries up to 20% of patrol that we pump at the station has sunflower oil inside. Oh, you mean does this oil in the the gas that I use for my car
>> in Singapore? No. But in many countries, absolutely.
>> Oh, this is what they call um
>> biofuel, right?
>> Exactly. Yeah. A lot of producers um instead of selling it to consumers to use at home would rather sell it to a refinery or to a patrol station because they're going to get better prices for their oil. What we've seen is that roughly 3 to 4 weeks after the war, the prices of seed oils like sunflower oil has started to rise maybe about 5 to 10%. Sugar is also another example of bofuel blending mandates for a lot of the largest producers in the world. Sugar from sugar cane makes both the sugar that we eat and also ethanol. So they would basically produce more ethanol from sugarcane and push it to the petrol station to blend with the fuel that they are selling. Um, so far we've seen relatively modest rise of 3 to 5%. But what we do expect is for this to gradually increase in the coming 3 to 4 months, probably another 5 to 10%. So what most people don't know is that onethird of the world's traded fertilizer actually goes through the street of hummus. The amount of fertilizer coming out from the Gulf has dropped along with oil. So for every uh 5% decline in fertilizer for wheat uh which we used which we grind to make flour we have a 2.5% decline in yield approximately. In terms of the impact to us we're seeing about anywhere from 3 to 5% increase in meat futures. What has chocolate got to do with what's happening in the world?
>> So, what a lot of people don't know is that a key component in chocolate is vegetable oil. We're going to see the same impact of chocolate.
>> I I'll take that. Thank you very much. For all these meats, will they also increase in price?
>> Yep, definitely. But we don't expect it to increase as fast. So, it'll take anywhere from 6 to 9 months to go up. And that's because it's what we call a second order effect, right? where we see an increase in the price of animal feed
>> and that then trickles into the increase in the cost of meat.
>> All right, let's take a look at our stash.
>> One thing that all these items have in common is packaging. So plastic is gen generally made from oil, right? And we've seen about at least a 15% increase in our packaging cost uh to date, right? And we expect more to come going forward.
>> Oh my gosh. So it sounds like just about everything somehow is connected. Yeah.
>> In fact, is there anything in this shop here that will remain the same price-wise that it will not be affected?
>> Definitely not. I think everything in this store has come here either by plane, by sea, or by truck. So, given the fuel oil prices, we expect everything to be impacted.
You may have noticed prices creeping up at your favorite hawker store, coffee shop, or even at the checkout. Question is, will they ever go back the status quo? fuel up. Yeah, but at what cost?
I'm meeting June Gold. She spent her life watching markets move in the oil industry. I want to know when we will see prices go back to normal.
>> Oh, hello. Morning, June.
>> Is it a bit early for drinks?
>> Hi, Steve.
>> No, not at all. This is for what we're going to talk about in a
>> really really
>> the oil market.
>> Where do you think prices are going?
>> Prices are set to remain elevated
>> throughout 2026. We have to look at the oil supply shock. We have 10 to 11 million barrels per day of crude oil that has been shut in production. That's 10% of global oil demand gone. Refinery that has been hit in the Middle East, for example, Saudi Arabia's Rasanor refinery, Kuwait Petroleum refinery and Ruise refinery in UAE, they all have suffered some damage. So they will need time to also recover their facilities and resume operations. And the timeline for recovery is not a quick, you know, snap of the finger. It will take likely 6 to 12 months in a way. I see. Yeah. This is at the point when the war ends and don't forget we are still at war. That's right.
>> So nobody can predict how long that will take as well.
>> So will petrol, diesel, jet fuel all kind of recover at the same pace?
>> Recovery time will be different. So the demand elasticity is very important here. So imagine this is your heaviest barrel which is the fuel oil.
>> Then diesel, jet fuel and petrol. Petrol will be the fastest to recover.
>> How come? Well, petrol is the least stressed barrel from day one. Before the crisis, we had high inventory levels and we can easily reduce the demand for petrol by driving less, having work from home policies and driving efficiently. For jet fuel, the demand can be quite elastic. Uh airlines cutting flights, traveler reducing discretionary travel, your jet price can therefore come down uh faster than the other products. And diesel although there is some reserves unfortunately this is a high demand product and is being used in so many industries. So the demand is inelastic and it will likely to remain to be sold. A few fuel oil the marine in the shipping business in container ship like diesel the demand is inelastic. So the government says we are secure but we don't know what kind of a fuel stop power we have except that it can last us for months.
So I want to find out just how well prepared we are to weather this storm and what else can we do to cushion the impact of this fuel crisis. Minister of State Gia Huang has agreed to meet me. She is part of the MTI team responsible for Singapore's fuel and energy security.
>> The supplies are still coming in. We have been able to diversify the import of gas in crude oil uh beyond the Middle East coming from North America, South America, Africa and different parts of the world.
>> We're the third largest in the world for oil trading and also we are the sixth largest oil refinery export hub
>> and we have benefited from that in that sense during this crisis. Since the refineries are here, is there some kind of relationship we have with them where we get first dips if you know things really run dry?
>> Well, we do have access uh to uh the oil and gas uh that's owned by the traders and the refineries here. It's on a contractual basis.
>> Okay.
>> Yeah. In fact, uh for our gas contracts, uh Jenkos do have uh pre-arranged uh contracts with the suppliers here for us to be able to acquire additional fuel when we need. So things sound pretty good for now, but at which point will we have to dip into our reserves?
>> Well, we are watching closely the international trade of oil and gas and how other countries are responding. Um, it's possible that perhaps some countries out of their own self-interest might start curbing exports of oil and gas, which is why it's so important for Singapore to work out bilateral agreements just like they've done with Australia and New Zealand to have that commitment of continued supply of essential uh goods and also uh fuel.
>> But the situation that's in Middle East is worrying. Nobody knows when the street will be open for trade flows again. If the situation is prolonged and there is sustained uh disruption to oil and gas supplies worldwide, we might have to consider dipping into our reserve.
When it comes to fuel prices, we've seen ours go up. Why aren't we subsidizing it? Why not?
>> When we subsidize patrol uh for vehicles, um those who drive bigger vehicles uh or drive more will benefit more. um that may not necessarily be the uh fairest way of uh distributing uh the government resources. Um instead what we try to do is to provide targeted support to groups that are most impacted.
>> I want to ask you about uh private hire cars. We've seen a search charge in the pricing. Now when I book a car, you know, the drivers have also been given some kind of subsidy, right? So why am I still paying more?
>> the $200 cash grant, it's to defay the increase in cost borne by the drivers. Um, I think it's important that this increase in cost is uh not fully bored by the drivers themselves and the government, but also consumers. Consumers also, I think, have a part to play in bearing uh the price increase.
>> So, in other words, sharing it among all of us.
>> That's right. I also met a private hire driver and a bus driver who owns buses for schools. They got some subsidies, some vouchers, but they're saying it's really not enough.
>> We've been in close touch with companies and also the various groups that are affected. There are a few requests and suggestions. We're ready to do more and provide targeted support to them.
Two months ago, more Singaporeans had never heard of the Strait of Hormoods. Well, today it's the reason your taxi costs more, your groceries are quietly creeping up in cost, and that flight you're planning to take, well, it's probably going to set you back significantly more than it would have. In part two, we delve into rising electricity tariffs and discover the real shock is yet to come.
>> Potentially, we could see about a 10% increase in electricity prices.