Date
12 December 2017
Only about 1 percent of cars in Hong Kong require 98 RON while the rest can run on 95 RON, a cheaper alternative, according to a study. Photo: HKEJ
Only about 1 percent of cars in Hong Kong require 98 RON while the rest can run on 95 RON, a cheaper alternative, according to a study. Photo: HKEJ

Local car owners forced to use expensive petrol, report finds

Hong Kong car owners are forced to use a more expensive type of petrol for lack of choice, according to a study by the Competition Commission.

Hong Kong is the only place in the world where only 98 RON, one of the most expensive and highest grades of petrol, is available to consumers, the Hong Kong Economic Journal reports.

In fact, only about 1 percent of cars in Hong Kong require 98 RON while the rest can run on 95 RON, a cheaper alternative.

In countries like Singapore, Australia and Canada, car owners can choose from cheaper alternatives such as 95 RON, the study found.

The commission also released a report outlining issues that hinder competition in the auto fuel industry.

But the two-year study did not find evidence of anti-competitive behavior in the market.

Professor Chong Tai-leung from the Institute of Global Economics and Finance of the Chinese University of Hong Kong said it would be a challenge for the commission to gather evidence on oil companies conspiring to set prices.

Chong said the government should introduce more competition by forcing each gas station to be run by at least two companies at the same time and pricing adjustments must submitted to the government for approval.

Hong Kong’s auto-fuel market is controlled by five major players — Shell, Esso, Caltex, Sinopec and Petro China.

Except Petro China, all four other companies operate their own oil refinery and gas stations, making it difficult for new players to enter the market.

The study also revealed issues regarding price displays.

Rasul Butt, senior executive director of the commission, said local oil stations usually do not have large outdoor price boards and those that are in place are not always easily visible from a distance, while some signages don’t display price information at all.

The complex discount system for pump prices also make it difficult for consumers to compare actual prices.

Butt said the commission will continue to investigate the matter.

Professor Lobo Hung-tak Louie from the Baptist University of Hong Kong said petrol is about 30 to 40 percent cheaper in the US than in Hong Kong.

He said the higher pricing is due to taxes, adding it would be a good idea to sell 95 RON in Hong Kong.

The study came up with six short-term and long-term proposals, including asking oil companies to sell 95 RON, adding more filling stations and putting up visible street signs to display prices.

The Environment Bureau said it will study the report and discuss it with various parties.

[Chinese version 中文版]

- Contact us at [email protected]

EL/AC/RA

Hong Kong Economic Journal

EJI Weekly Newsletter

Please click here to unsubscribe