Take advantage of the opportunity presented by falling fuel prices.

Yesterday (December 22), the price of RON 92 and RON 95 gasoline decreased by 2,050 VND/liter, reaching a record low in the past four years. Economic experts view the reduction in gasoline prices as a positive step to lower the prices of goods, stimulate purchasing power, and support businesses in overcoming difficulties in production and business.

Helping businesses reduce costs

According to leaders of the Vietnam National Petroleum Group (Petrolimex), this price reduction stems from the actual fluctuations in refined petroleum product prices on the world market during the pricing cycle, in accordance with the principles for determining selling prices as stipulated in Government Decree No. 83/2014/ND-CP dated September 3, 2014, on petroleum business (Decree 83) and the guiding documents for the implementation of Decree 83 issued by the Ministry of Industry and Trade - Ministry of Finance.

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

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

According to expert Vu Vinh Phu, the forecast of a low CPI increase in December is entirely plausible because purchasing power this year has increased very slowly. Mr. Phu stated that purchasing power over the past 11 months has been very weak, increasing by only 5%, whereas during periods of strong growth it could reach 10-12%. The decrease in gasoline prices could lead to lower prices for other goods, thereby boosting purchasing power, especially in the context of the busy year-end shopping season. This is a positive impact.

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

Fuel prices have fallen, but transportation costs have not.

Although fuel price reductions can have positive impacts on the economy, according to economist Dr. Nguyen Minh Phong, previous fuel price cuts show that lower fuel prices do not automatically lead to lower prices for all other goods. The stagnation is particularly evident in transportation costs. "It can be said that even with sharp drops in both global and domestic fuel prices, transportation costs do not decrease voluntarily but require subjective intervention from state management agencies," Dr. Phong stated.

Mr. Phong expressed concern that, after this record price reduction, transportation costs would repeat the same pattern of stubbornly refusing to lower prices until relevant ministries and agencies intervene. This would prevent the reduction in commodity prices, and the decrease in gasoline prices would not benefit the people. Therefore, state management agencies need to quickly intervene to regulate commodity prices so that they decrease in line with gasoline prices.

In previous fuel price reductions, many people expected a significant impact on transportation costs. However, the unfairness was evident in the fact that transportation costs remained stubbornly low, or if they did decrease, it was only minimally.

According to economist Ngo Tri Long, taxi and transportation fares must follow fluctuations in world oil prices. It's unacceptable to argue that because Vietnam's gasoline prices are unstable, taxi fares should also be unstable. "Under a market mechanism, adhering to world prices is obvious. Businesses cannot demand unreasonable price controls," said Dr. Long.

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

Mr. Long proposed: “The competitiveness of businesses depends on many factors such as production costs, prices, corruption, fuel and materials... Among these, fuel is a very important input factor. Therefore, in the current context of businesses facing difficulties and weak purchasing power, the State needs to alleviate difficulties by reducing taxes and fees to further lower fuel prices to match world prices.”

According to VNA