Fuel prices decline not as high as expected

The ministries of Industry, and Trade, and Finance, on the afternoon of March 21, decided to request fuel enterprises to lower prices for all retail gasoline and oil products in the domestic market. However, consumers and businesses that directly use fuel assess that the reduction in gasoline prices in this adjustment is not as expected, although the global gasoline prices dropped sharply in the past week.
Fuel prices decline not as high as expected ảnh 1 A petrol station in Hanoi adjusts fuel prices on March 21. (Photo: SGGP)

Gasoline slid by VND655 per liter

Specifically, the price of E5 RON 92 gasoline decreased by only VND655 per liter compared to the previous adjustment, and that of RON 95 gasoline dropped by VND632 per liter. Particularly, oil products saw higher decreases, with 0.05S diesel oil falling by VND1,635 per liter and kerosene declining by VND1,673 per liter.

Thus, currently, E5 RON 92 gasoline is sold at VND28,330 per liter, and RON 95 gasoline at VND29,192 per liter, which are still shock prices for consumers and enterprises in the transportation, aviation, tourism, agricultural production, and fishing industries.

Previously, the domestic retail petrol market had seven consecutive hikes, and the petrol prices rose to a record high in the last two adjustments. Compared to the beginning of 2022, gasoline prices have recently jumped by VND4,625-VND7,030 per liter or kg, depending on the type. According to enterprises, gasoline prices have increased by 25-40 percent since the beginning of the year. On March 11 alone, domestic gasoline prices soared by nearly VND3,000 per liter. Thus, with the decrease on March 21, gasoline prices remain at a high level, not returning to the previous level or not as expected by consumers.

According to the explanation of the ministries of Industry and Trade and Finance, gasoline prices were adjusted slightly on March 21 because the world petroleum market is still complicated. After falling in mid-March, petrol prices tend to go up again due to concerns that petrol supply will drop sharply when petroleum and gas sources from Russia are embargoed, while the Organization of Petroleum Exporting Countries has not decided to increase supply yet.

Taking the opportunity to set up the fuel price stabilization fund

A leader of the Ministry of Industry and Trade said that such a reduction in gasoline prices is acceptable amid the trend of the global petroleum market and the current international geopolitical situation. It is necessary to use the Fuel Price Stabilization Fund in this adjustment to reduce fuel prices further. However, in the context that the fund is about to run out, it is necessary to limit spending and take the opportunity to set up the fund for problems in the long run.

The ministries of Industry and Trade and Finance also said that, in the last adjustment, the average price of petroleum products on the global market decreased compared to that in the previous one (although it tends to rise again in recent days). However, the spending level of the Fuel Price Stabilization Fund for petrol products was relatively high, from VND300-VND1,500 per liter. Meanwhile, the fund balance at 13 petroleum trading enterprises was negative.

Therefore, to have room to manage prices in the coming adjustments when the market remains complicated, the ministries decided to reduce the use of the fund for petroleum products and start setting up the fund for some petrol products so that domestic gasoline prices fluctuate according to the trend of global prices, lessening pressure on the fund, ensuring the target of inflation control and market stabilization to support consumers and businesses in the process of recovering production and business activities.

Accordingly, the provision for E5 RON 92 gasoline is at VND200 per liter, RON 95 gasoline at VND50 per liter, diesel oil at VND400 per liter, kerosene at VND300 per liter, and fuel oil at VND0 per kg. In addition, fuel traders are not allowed to use the fund for all petroleum products.

Over the past time, in the face of rising global gasoline prices, the State encouraged fuel enterprises to increase imports. At the same time, fuel wholesalers also increased stockpiling goods. Therefore, if gasoline prices fell higher than VND1,000 per liter, both the State and enterprises would have to compensate for losses.

According to experts' forecasts, gasoline prices may still increase again soon and depend on the war situation, as well as the embargo of oil and gas supply from Russia. For domestic gasoline prices to decline further and lessen the impact of world gasoline prices, it is necessary to wait until April, when the National Assembly Standing Committee passes the resolution on reducing environmental protection tax on petrol products, gasoline prices will decrease by VND2,000 per liter, oil products by VND1,000 per liter, and kerosene by VND700 per liter.

According to the ministries of Industry and Trade and Finance, globally, the average price of finished petroleum products between March 11 and March 21 is at US$121.912 a barrel of RON 92 gasoline used to prepare E5 RON 92 gasoline, down $10.34 a barrel, or 7.82 percent compared to the previous period; at $125.842 a barrel of RON 95 gasoline, down $9.908 a barrel, or 7.3 percent; at $120.408 a barrel of kerosene, down $14.84 a barrel, or 10.97 percent; at $122.338 a barrel of diesel oil, down $22.853 a barrel, or 15.74 percent; at $625.090 per ton of fuel oil 180CST 3.5S, down $22.757 per ton, or 3.51 percent.