Take advantage of the opportunity from falling gasoline prices

Yesterday (December 22), the price of RON 92 and RON 95 gasoline decreased by VND2,050/liter, reaching a record low in the past 4 years. Economic experts see the reduction in gasoline prices as a positive move to reduce commodity prices, stimulate purchasing power and support businesses in overcoming difficulties in production and business.

Help businesses reduce costs

The leader of the Vietnam National Petroleum Group (Petrolimex) said that this reduction in gasoline prices comes from the practical developments in finished gasoline prices on the world market during the pricing cycle, in accordance with the principles of determining selling prices in Decree No. 83/2014/ND-CP dated September 3, 2014 of the Government on gasoline trading (Decree 83) and documents guiding the implementation of Decree 83 of the Ministry of Industry and Trade - Ministry of Finance.

Specifically, from 3:00 p.m. yesterday, the retail price of A92 gasoline and E5 bio-fuel was 17,880 VND/liter, the price of A95 gasoline was 18,480 VND/liter (down 2,050 VND/liter). Diesel oil decreased by 1,420 VND to 16,990 VND/liter. Fuel oil and kerosene also decreased by 1,690 VND and 1,570 VND to 13,130 VND/kg and 17,400 VND/liter, respectively. This is the 12th consecutive gasoline price reduction with a total reduction of 7,769 VND/liter. Gasoline prices are at their lowest level in the past 4 years.

Record drop in gasoline prices will have a positive impact on the commodity market. Photo: Vu Sinh – VNA

Expert Vu Vinh Phu said that the low CPI increase in December is a completely reasonable prediction because purchasing power this year has increased very little. Mr. Phu said that purchasing power in the past 11 months has been very weak, increasing only 5%, while in a strong period it can increase by 10 - 12%. The decrease in gasoline prices can lead to a decrease in commodity prices, thereby promoting increased purchasing power, especially in the context of the bustling year-end shopping season. This is a positive impact.

Mr. Tran Hoang Ngan, member of the National Monetary Advisory Council, said: “The decrease in gasoline prices will help reduce costs related to transportation and production, thereby helping businesses reduce costs and increase profits. As a result, corporate income tax revenue will increase and compensate for the shortfall in revenue from crude oil.”

Gasoline prices decrease, but freight rates do not decrease

Although it can bring positive impacts to the economy, according to economic expert Dr. Nguyen Minh Phong, from previous reductions in gasoline prices, it can be seen that when gasoline prices decrease, all other goods do not decrease accordingly. In particular, the stagnation is clearly shown in transportation fares. "It can be said that although world and domestic gasoline prices have decreased sharply, transportation fares have not decreased voluntarily but have to rely on subjective intervention factors of state management agencies," said Mr. Phong.

Mr. Phong is concerned that after this record price reduction, transportation fares will repeat the story of being slow to reduce prices until ministries and sectors take action. That makes it impossible for goods prices to decrease and reducing gasoline prices will not benefit the people. Therefore, state management agencies need to take action soon to regulate the price of goods to decrease in line with gasoline prices.

In previous oil price reductions, what many people expected was that the oil price reduction would have a strong impact on transportation fares. However, the unfairness was shown in the fact that transportation fares were slow to decrease, or if they decreased, it was only at a... moderate level.

According to economic expert Ngo Tri Long, taxi and transportation fares must follow the fluctuations of world oil prices. We cannot use the excuse that Vietnam's oil prices are not stable, so taxi fares are not stable either. "Following the market mechanism, following world prices is obvious. Businesses cannot demand unreasonable price maintenance," said Dr. Long.

From another perspective, Mr. Ngo Tri Long assessed that although gasoline prices have decreased, they are still high due to having to pay too many taxes and fees. "In the context of many difficulties for businesses, such high gasoline prices will weaken the competitiveness of businesses," Mr. Long said.

Mr. Long suggested: “The competitiveness of enterprises depends on many factors such as production costs, prices, corruption, fuel and materials... In which, fuel is an input factor that plays a very important role. Therefore, in the context of difficulties for enterprises and weak purchasing power as at present, the State needs to overcome difficulties through reducing taxes and fees to continue reducing fuel prices to be compatible with world prices.”

According to VNA