Who benefits the most from lower oil prices?
The oil price has dropped by $30 per barrel. It is estimated that every one dollar price decrease would lead to a loss of VND1 trillion in revenue. As such, the state budget would lose VND20 trillion in 2015 if the price were around $80 per barrel.
Bui Ngoc Son, a renowned economist, said in general the global economy would benefit from the oil price decrease because this would help cut production costs.
Foreign specialists pointed out that the price fall to $80 per barrel can be compared with a demand stimulus package worth $2 trillion.
The oil price decrease has resulted in a sharp fall of VND5,390 per liter, or 20 percent, in petrol prices in the domestic market. This has benefited consumers, who can use the money they save from buying petrol to buy other products.
However, analysts say the benefit is too small and far below expectations.
In principle, the fuel price decreases lead to goods price decreases. Especially in Vietnam, petrol prices account for 40-50 percent of the production cost and 10-15 percent of the product selling prices.
However, the prices of goods and services remain unchanged. The transport fee stays high, while manufacturers, taking into account the high transportation costs, try to keep the same selling prices.
“This can be explained by the fact that the rules of the market economy have not been respected, while the market competition is weak, which is a favourable condition for businesses to sway the market,” Son said.
In other words, since the transport market is not competitive, transport firms may collude with each other to set up service fees at high levels to seek profits.
Son also believes that corruption is the major reason behind the problem. Since vehicles’ owners have to pay an “under-the-table fee” to “lubricate the administrative apparatus”, they take the fee into account and charge a high fee on consumers.
Therefore, the biggest beneficiary so far is petroleum distributors, especially the Petroleum Import - Export Corporation, or Petrolimex, which holds 70 percent of the distribution market.
In principle, the petrol price is subject to state’s management, but Petrolimex, the “big guy” dominating the market, still can set prices as it wants.
Minister of Industry and Trade Vu Huy Hoang also said it is unreasonable that transport firms have not slashed fees even though the petrol price has fallen in the last few months.
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