Crude oil prices surged in October 2021 by more than 12% on a monthly average – FCCC

The Fijian Competition and Consumer Commission says when there are unfavourable movements in international prices for fuel products the prices in Fiji will increase while fuel prices in Fiji will decrease when there are favourable movements.

While confirming that crude oil prices surged in October 2021 by more than 12 percent on a monthly average, FCCC says relative to Fiji, there are many factors that determine what makes international prices favourable and unfavourable.

These include the cost of crude oil in oil producing nations (fuel is made from crude oil), the costs of refining oil, distribution and marketing costs, commission that every party along the way charges, the demand for fuel, insurance, freight and transport costs, the impacts of COVID-19, political tensions between oil producing nations – just to name a few.

The Commission says none of these factors can be controlled from Fiji and, because fuel is such a crucial part of our daily lives, we become price-takers, meaning we must accept the prevailing international price for fuel.

FCCC says they exist to regulate prices of industries and markets where competition is lessened or limited – and one such market is the one for fuel.

It also says all fuel used in Fiji is imported.

FCCC says there are no local production or refineries, obviously, and businesses that import fuel are exposed to whatever the international market prices are, and the foreign exchange rates that are involved.

It says ultimately, the entire international setup of fuel production, transport and logistics, and pricing is very complex.

FCCC says fortunately, there are internationally recognised pricing assessments, such as the Means of Platts Singapore (or MOPS), where the value of fuel is assessed.

FCCC uses this to regulate fuel prices in Fiji.

When assessing changes in fuel prices, FCCC says it follows a one-month lag period. For example, assessment on fuel prices for December 2021 will be based on changes in prices over October 2021, and that for January 2022 will be based on changes in prices over November 2021.

It says through this pricing mechanism, FCCC ensures that domestic fuel price movements are aligned to most reliable, and accurate, world market prices.