Motorists brace themselves to pay more for petrol in Singapore's push for a sustainable future

SINGAPORE – Mr Benny Tay, 45, was “a bit disappointed” when he heard that he had to pay more for petrol from Tuesday (Feb 16).

As a Gojek driver, he was hoping petrol prices would go down, especially when demand for private-hire has yet to return to pre-coronavirus levels. Because the distance he covers on the job requires him to refill his tank daily, Mr Tay estimates the 10 cents a litre increase in duties for 95-octane petrol, which he uses, translates to an extra $5.50 to $6 in costs every day.

“I thought, ‘There we go again’,” Mr Tay said. “I’m quite numb at this point as petrol prices usually go up instead of falling. But I thought it would be different this time with the bad economy.

“I will likely have to drive an extra trip a day to make up for the higher petrol expenses.” Mr Tay said he works12 to 14-hour days now, six days a week. He noted there are fewer passengers now and he has to roam the streets with an empty car for longer periods of time.

To cushion the blow of the hike, taxi and private-hire drivers like him will get a 15 per cent rebate on their road tax for a year, and an additional $360 petrol duty rebate over four months if they are active drivers.

The duty hike announced on Tuesday was the first in six years, and came when pump prices were already at their highest in almost a year, matching what they were before the pandemic caused a crash in oil prices globally.

They rose further on Wednesday, reflecting the heightened duties. Premium grade (98-octane and above) petrol was retailing at between $2.68 and $3.01 per litre at all stations here, with Shell’s V-Power crossing the $3 mark for the first time.

Prices for 95-octane petrol was $2.32 per litre, except at SPC, where it was $2.25. Per litre prices for 92-octane was $2.28 at Caltex and Esso, and $2.21 at SPC.

Petrol duties now stand at 79 cents a litre for 98-octane and higher grades and 66 cents a litre for 92-octane and 95-octane, an increase of 15 cents per litre and 10 cents a litre respectively.

The Government said the latest measures are meant to encourage Singaporeans to reduce the amount they drive, or to get people to consider buying electric vehicles, which are more environmentally-friendly.

But motorists, car dealers and observers The Straits Times spoke to said the hikes are unlikely to change motorists’ behaviour in the short-term.

The current under-development of electric vehicle charging infrastructure, especially at Housing Board blocks, means electric vehicles are simply not yet feasible for most drivers.

Mr Lennard Chan, 45, a data science student at the IBM skills academy, said: “I am driving a hybrid car but will not consider electric vehicles until there are enough charging points. I refill my tank about once every 11/2 weeks, so it is not too painful.”

He is resigned to the petrol duty hike. “There is no choice but to live in the times.”

Mr Raymond Tang, managing director of car dealership Yong Lee Seng Motor, told The Straits Times that “the mass market is simply not ready” for electric vehicles.

Apart from the shortage of charging points, people have not embraced electric vehicles as a mainstream option. He said it took nearly 10 years for hybrid cars, launched in the early 1990s, to be accepted here as reliable vehicles; electric vehicles have been around for fewer than 10 years.

The population of electric cars on the road as at January 2020 was about 1,125, fewer than 0.2 per cent of the total private car population. Mr Tang said this is in part due to the Government not really pushing electric vehicles, with conditions for their widespread adoption not yet in place.

“It is likely people who live in landed properties, buying their second cars, who will be able to afford the electric vehicles and have access to charging points. There is also the added concern that people who want to drive their cars into Malaysia when the borders reopen will not be able to do so without charging points there,” he said.

The Government’s target is to have 60,000 charging points by 2030. There are about 1,800 now, with private companies now roped in to help accelerate the process.

According to an International Energy Agency report published last year, sales of electric cars globally in 2019 topped 2.1 million units, increasing by 40 per cent from the year before.

Dr Timothy Wong, a senior lecturer in the department of economics at the National University of Singapore’s faculty of arts and social sciences, said the one-year road tax rebate would render any shift towards electric vehicles negligible for now.

He said the average private car driver will probably pay between $60 and $100 more a year on petrol, an increase which will be offset by road tax rebates in the order of $40 to $50.

“He comes out only slightly less well off. What (the petrol duty hikes) will do is nudge drivers slightly away from making more car trips. Drivers who currently make a lot of trips may not drive for less essential activities,” he said.

CIMB Economist Professor Song Seng Wun said the Government’s move says, “make no mistake, this is where we are heading in the coming years”.

He said: “There is no good time to increase petrol prices. It sets the background for more sustainable cars being the future and Singapore being Singapore, will refine the policy as we go along.”

National University of Singapore transport infrastructure expert Raymond Ong said that, taken together with other punitive measures on petrol car owners and rebates for cars using cleaner energy, the current cost advantage of buying internal combustion engine vehicles will be reduced.

” This will make users who are already cost sensitive, which is the majority of the drivers and companies who own fleets of vehicles, to think twice before investing in internal combustion engine vehicles,” he said.

He added that the policy shift is necessary to help Singapore reduce its carbon footprint.

“Petrol consumption has been relatively stable over the years but the high amounts does not help in addressing Singapore’s long term goals in meeting carbon emission targets.

“They are necessary to ensure Singapore meets its target carbon emissions.”

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