Are the major oil companies waiting for a call to lower prices?

(Baonghean) - From July 27th until now, while global oil prices have decreased by 0.5 to 0.8% (in some places like New York, crude oil prices on the exchange fell by as much as 3.1%) and are trending downwards, the price of these commodities in Vietnam has maintained the increase from July 17th, reaching 24,570 VND/liter for gasoline and 22,020 VND/liter for diesel. This price is only 10 VND less than the record high set at the end of March this year.

For a long time, Vietnamese consumers have been accustomed to seeing that when global oil prices start to rise, the major oil companies loudly proclaim that they are incurring significant losses and need to raise prices to compensate! And, usually, they are immediately allowed to increase gasoline prices. Very quickly. Very promptly! But when global oil prices fall, even sharply, domestic prices are "slow"... waiting. They wait until they can't wait any longer before lowering prices. And even then, the price reductions aren't as "sudden" as the increases. Remember at the end of March this year, the retail price of each liter of gasoline increased by 1,430 dong. But subsequent reductions were only around 500 dong/liter. It's easy to see that when gasoline prices increase, especially in a "sudden" way, almost all other goods increase, and when gasoline prices fall, it's difficult for related goods to decrease. Especially transportation costs.

According to authorities, there have been 7 adjustments to gasoline prices since the beginning of the year, including 4 increases and 3 decreases. Each adjustment has resulted in a "sharing" of benefits among three parties: the State, the people, and businesses. The regulatory agency explains this, but consumers think differently. For example, in the three most recent adjustments, gasoline prices increased by a total of 1,240 VND/liter, only 190 VND less than the increase at the end of March.

Those familiar with the matter question whether the authorities reviewed the average base price over the previous 30 days before allowing distributors to adjust prices. Furthermore, the frequent price adjustments create significant difficulties for businesses, especially those that use large quantities of gasoline and diesel fuel!

Returning to the issue of "rapid increases, slow decreases" in gasoline and diesel prices: According to Government Decree 84/2009 on gasoline and diesel business, businesses are allowed to increase prices three times a month. This means they are allowed to increase prices at least once every 10 days. Regarding price reductions, the decree doesn't specify a particular number of days, but it must not exceed 10 days from the date world gasoline and diesel prices decrease. If prices don't decrease within 10 days, the authorities will require the businesses to do so.

Global gasoline prices have been falling and trending downwards for only about a week, so the major gasoline companies seem to be waiting for more than 10 days.

Viet Long