How the Oil Prices Affects Car Owners & Ways to Save on Petrol
Influences for Oil Prices Fluctuation
For the past few months, oil prices have been skyrocketing all over the world. With fluctuations and uncertainty in various countries, Singapore is inevitably susceptible to the price hikes. As 76% of Singapore’s oil supply is being imported, and with petrol being a crucial resource for car owners, the changes in oil prices have far-reaching effects on the lives of many Singaporeans.
So what has caused all this disruption? There are a lot of factors that influence the price of petrol including the demand and supply of petrol.
Supply and Demand
As more in-person areas and activities are being opened up, more transportation usage is being activated. This creates more demand for oil and energy supplies while there is not enough supply. The supply will depend on the amount of crude extracted from their resources and the demand will depend on the transportation, population, and the time of year.
OPEC (Organisation of Petroleum Exporting Countries)
OPEC refers to the 13 countries around the world who are the largest oil suppliers/producers and make up 60% of the oil traded globally. They work together to arrange policies regarding petrol and to oversee the supply of oil around the world. They do this by maintaining the supply to set the oil prices in the global market. OPEC sets the target of how much oil they should produce within the countries, and how much they should keep on hand. This reflects the current supply and demand, as well as the expected future supply and demand. Usually, when the production goals are reduced in these countries, the prices around the world for oil will increase, therefore impacting the oil needs of businesses, communities and people alike.
Increase in Travel
As the COVID-19 restrictions for most of the world are loosening up, more people are looking to travel and vacation from the lost times of the pandemic. There is more demand for flights, rental cars, increase of people in buses, boats, and more. With the increased demand and rise in oil prices all around the world, the supply is a lot more limited with the massive growth in transportation use.
Consequently, with increased travel, travel insurance is just as important when going abroad, or even locally. Some travel insurance cover before, during, and even after getting COVID-19 affects your travels. Check out more by reading this article on Travel Insurance and COVID-19.
Best Travel Insurance For Inconvenience Coverage: Allianz Travel
- Personal Accident Coverage
- S$80,000
- Trip Delay Coverage
- S$1,500
- Baggage Delay Coverage
- S$1,400
Policies, Events, and News
There is a limited amount of oil around the world and the places that provide the supply are also limited. Thus, when there are policy changes, major news/events happen regarding the oil supplier and the country, the market value of crude is also subject to be affected.
Ukraine-Russian War
Russia being the world’s third largest oil supplier, the Russian war that started on February 24th, 2022 impacted the prices of oil significantly. If Russia is not exporting to some parts of the world, the general supply of petrol becomes very limited, affecting the prices. Comparing the prices before and after the war, the oil prices have doubled this year compared to 2021. This includes the market price of just the oil itself, but the market value of OIL (shares, futures, option contracts) in trading as well.
Petrol Prices for 95 Gasoline
| December 2021 | March 2022 | June 2022 | August 2022 | October 2022 |
|---|---|---|---|---|
| S$2.61 | S$3.23 | S$3.42 | S$2.88 | $2.76 |
Oil Price in SGD per Barrel (Trading)
| December 2021 | March 2022 | August 2022 | October 2022 |
|---|---|---|---|
| S$90.45 | S$172.80 | S$124.55 | $126.38 |
How This Affects Car Owners
Oil price is one of the crucial factors that determine how much it is worth to be transporting by car. Although petrol is an inelastic good, if oil prices rise, it will affect the spending on other goods that are part of the necessities in a person’s monthly expenses.
If the oil prices are constantly fluctuating, this also affects the car owners as their monthly expenditures fluctuate sporadically as well.
Saving When Purchasing Petrol
With oil prices reaching their peak point over the past months, the Singapore government has responded to the concerns and outcries of many. They will review and analyse the oil prices to determine whether or not they can help relieve some of the financial burden.
Moreover, there are other ways one can save when purchasing petroleum products by using credit cards with great perks for car owners.
Citi Cash Back Card: Easy Savings on Dining, Groceries and Petrol
- Pros
- Great dining and groceries rewards
- High petrol discounts
- Cons
- Lacks shopping and entertainment rewards
- Not suitable for lower budgets
Standard Chartered Unlimited Cashback Credit Card: Unlimited Rebates Worldwide
- Pros
- Unlimited 1.5% flat cashback
- No minimum spend requirement
- Up to 21% fuel savings with Caltex
- Cons
- No boosted rates in specific categories
- No travel perks
UOB One Credit Card: Highest Rebate for Stable Budgets
- Pros
- Good fit for budgets of at least S$2,000 per month
- Easy cashback on daily spend
- Gives rebates for paying bills
- Cons
- Doesn't fit inconsistent budgets
- Annual fee
Conclusion
The demand for petrol had gone up over the course of this year while the supply has dropped. However, with the oil prices becoming more stable around the world, it relieves many concerns most drivers and car owners would have had. Owning a car in Singapore can be expensive, but with the use of petrol credits cards, you can save more and the cost will be a lot more bearable.