Factors Affecting Diesel Prices In Singapore
B usinesses in the transportation and logistics, manufacturing, and construction sectors rely heavily on diesel supply for their daily operations. Without diesel supply, business operations may not be able to run efficiently or smoothly enough to generate income for the company. However, diesel supplies are sometimes one of the largest expenses, and their fluctuating prices may catch you off guard and disrupt your business operations at times.
While the average consumer may not pay much attention to the fluctuations in price, as a business, you have no choice but to look into the factors that will influence diesel prices. Price fluctuations can affect your profit margin and understanding how prices are affected can help you make better operational decisions.
There are two types of factors that can affect diesel prices, macroeconomic factors influencing the industry altogether and microeconomic factors affecting what consumers such as your business pays.
1. Cost of Crude Oil
Diesel fuel is produced from the fractional distillation of crude oil and diesel pricing is greatly affected by the supply and cost of crude oil, which can be influenced by a few macroeconomic factors.
- Global Weather Patterns
- Geopolitical Crises & Tensions
Disruptive weather conditions in countries producing and exporting crude oil supply can have a negative impact on diesel price changes. Bad weather and climate such as cold temperatures that fall below crude oil’s freezing point can disrupt its production, resulting in a spike in crude oil prices due to low supply and high demand.
Political instability, governance issues, political events, disasters and war are just some examples of geopolitical crises and tensions. Some notable events include the Iran-Iraq war, Arab oil embargo, or Asian Financial Crisis.
When issues such as these arise, they create uncertainty about the future supply and demand of crude oil, causing oil prices to become extremely volatile. They can even disrupt the flow of oil, thus affecting diesel prices.
1. Competitor Prices
Microeconomic factors usually involve consumers and competitors because the price changes at a certain diesel supplier in Singapore are often be affected by its demand amongst its customers.
Consumers and competitors are the main drivers of price fluctuations because the price changes at a certain diesel supplier in Singapore can often affect the number of customers they attract.
Customers will naturally flock to a diesel supplier with one of the lowest prices. This is especially true amongst businesses because they need to ensure a greater profit margin. Due to the rise in transparency amongst businesses, companies now have access to several prices and packages offered by various diesel suppliers in Singapore, allowing them to compare services and purchase their diesel supply from the one with the lowest price. This may sometimes lead to a price war between competitors trying to offer the lowest price in the market.
However, it is never advisable for your business to jump onto this opportunity to obtain your diesel supply at the lowest rate. This is because the diesel supply quality may be compromised and obtaining diesel supply isn’t just about finding the cheapest supplier.
2. Marketing & Distribution Costs
You should be well aware of the term “profit and loss” if you’re running a business, or working under one. Many businesses charge a premium price for goods and services in order to generate extra funds for other business activities, one of which is marketing activities to raise brand awareness and gain more customers.
In order to fund their marketing efforts without suffering a loss, diesel suppliers may also price their diesel higher so as to ensure enough cash flow within the business while marketing their goods and services.
Tax fees will be incurred whenever a diesel supplier imports their diesel supply from other countries and refineries, supplying diesel to businesses in Singapore may also require them to pay taxes or other fees as well. These will all affect the cost of diesel in Singapore as suppliers try to balance their profit and loss.
Oil prices are almost impossible to control especially in Singapore because we don’t produce our own oil supplies. The price that businesses have to pay for diesel supply in Singapore is also predominantly influenced by macroeconomic factors, and yet, high prices do not necessarily mean quality fuel and great service. So, what options do you have as a business in Singapore?
At Vegatron, we aim to deliver the best diesel supply at competitive prices while ensuring excellent customer service. Whether you’re a small business operator or a global conglomerate, you can count on Vegatron for all your diesel needs. Contact us today to get started.