Explaination Letter written by ExxonMobil Asia Pacific

[Guest mr X]

Pump prices affected by not just one factor

I REFER to Mr Ryan Tung's letter, 'Pump query' (Sept 5), in which he commented that there was a less than perfect correlation between pump prices and crude. We wish to clarify the factors affecting pump prices.

Retail pump prices are affected by a combination of factors, and hence may not rise or fall in perfect unison or by the same percentages as crude prices. The other factors that affect pump prices include:

* Internationally traded wholesale prices;

* Operating and capital cost;

* Taxes and duties;

* Currency exchange rates; and

* Market competition.

A change in any of these factors may lead to pump price adjustments. Wholesale fuel prices account for approximately 40 per cent of pump prices in Singapore. Wholesale prices are the result of the actions of many buyers and sellers operating in a global marketplace, and crude prices are just one of the many determinants of wholesale prices.

In Singapore, taxes and duties make up about 30 per cent of pump prices, and the remaining 30 per cent cover our margin and cost of operations (for example, shipping, storage, distribution, marketing, manpower, land and other fixed-asset costs).

Competition is keen in geographically small Singapore, and motorists are extremely price-sensitive and will respond to small changes in pricing. It is precisely because of this keen competition that no company will allow the others a price advantage at the retail pumps.

At ExxonMobil, our focus is to continually take steps to improve our ability to compete and distinguish ourselves by providing more value and convenience to our customers. We would like to reiterate that we at ExxonMobil support free and fair competition and are strongly against any form of anti-competitive practices.

Loh Pin Chuan

Public Affairs Manager

ExxonMobil Asia Pacific

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