Petroleum prices warned to rise sharply

The petroleum prices in the world have been fluctuating all the time, therefore, it is very difficult to give predictions about how high the domestic petroleum prices would be in the time to come. However, experts believe that the prices will keep rising due to the increasing demand.

Deputy General Director of Petrolimex, Nguyen Quang Kien said at the meeting with the Ministry of Industry and Trade several days ago, that the petroleum prices are on the rise. Petrolimex is now holding 52 percent of the petroleum distribution market and it is one of the 11 existing petroleum importers in Vietnam.

Kien said that the petroleum prices in the world have been fluctuating all the time, while having climbed to over 100 dollars per barrel. In the first five months of the year, the prices of all petroleum products have increased by 32-40 percent in comparison with the same period of the last year. Meanwhile, the crude oil price has increased by 25 percent only, which means that the prices of finished products have increased more rapidly than the crude oil.

In the last five months, Petrolimex purchased 2,270,000 tons of petroleum products, including 780,000 tons from the Dung Quat Oil Refinery. Since the domestic oil refinery halted the production for 10 days for maintenance, the corporation had to import 400,000 tons more, worth 400 million dollars, to ensure sufficient supply.

Also according to Kien, many experts believe that in the last six months of the year, the petroleum prices would increase more sharply than previously expected due to the increasing demand. Also, the Dung Quat Oil Refinery is scheduled to halt production for two months for maintenance; therefore, the petroleum imports would increase, thus leading to the higher demand for foreign currencies.

Kien has proposed to apply the regulations stipulated in the Decree 84, on regulating the petroleum market in accordance with the market rules and take measures to assist the petroleum trade activities.

The current A92 and A95 petrol prices in Vietnam are the lowest in the region, at 21,300 and 21,800 dong per liter. Meanwhile, in Laos, A92 petrol is selling at 27,000 dong per liter, and A95 at 29,700 dong, while the prices are 26,000 and 28,000 dong in Cambodia and 24,800 dong and 26,000 dong in Thailand, respectively. As such, petroleum products are cheaper by 10-40 percent than that in other regional countries.

Deputy Minister of Industry and Trade, Nguyen Thanh Bien said that there’s no need to worry about the dollar supply for petroleum imports. The implementation of the government’s Resolution No 11 on curbing inflation has been going smoothly; therefore, the foreign currency market has been stabilized and the foreign currency supply has become more profuse.

However, Bien said that it will require thorough consideration on adjusting the petroleum prices in accordance with the market rules, especially when Vietnam is making every effort to fight inflation. Since the petroleum prices always have big impacts on other products, the petroleum market still needs management by the State.

Vietnam once adjusted the electricity price in the first five months of the year. Though the price adjustment has had big influences on people lives and raised the CPI and it has brought active effects to the power sector. When the electricity price increases, people have to save power. This shows that adjusting prices is an important factor to enterprises’ operation and the import-export balancing.

Also according to Bien, within the first five months of the year, the prices of import products increased sharply, by 24 percent in comparison with the same period of 2010. Especially, petroleum import prices have increased by 41.5 percent and rubber by 25.5 percent. The price increases were an important factor that made the import turnover increase by 9.4 billion dollars and made the trade gap increase by 1.5 billion dollars.

Tags: Vietnam petrol, Vietnam Petrol prices