Letter from Looi Yew Chow, Straits Times Forum 17 Jul 08;
THE price of compressed natural gas (CNG) has gone up and up. For instance, at Smart Energy's Mandai station, it went up to $1.73 on Monday, up 14 cents since the last hike on July 8.
CNG occurs naturally, requires little processing other than filtering, and even less storage as it is delivered by pipeline. Compared to petrol, diesel and liquefied petroleum gas (LPG), there is no distilling, cracking, additives or other cost involved. There are vast reserves which will outlast crude oil supplies.
So it appears consumers are trapped by the near-perfect monopoly of the CNG market, which currently seems to be unregulated.
In his Forum reply to a letter, Mr Paul Lim, GM of Sembcorp Gas, said the price of CNG is pegged to high sulphur fuel oil (HSFO), an oil derivative ('Price of CNG pegged to that of oil derivative', July 2). Given the lower production cost and even greater supply, it does not seem to make sense to peg the price of CNG to HSFO.
When CNG was launched, it was trumpeted as a cheaper alternative to petrol, at promised savings of about 60 per cent.
At today's pump prices, it may not be true much longer. Drivers like me�went green believing that promise, braving the inconvenience of less boot space and limited fuel stations.
Others installed CNG in their cars voluntarily and hoped to break even in slightly over a year.
But the quantum and swiftness of CNG price hikes have scuttled that promise, leaping from $1.18 per kilo before May 1 to $1.73 in less than 21/2 months.
Comparing the price of 95-octane petrol at $2.21 per litre after discount, CNG is only 21.7 per cent cheaper.
If my CNG tank has a capacity of 10kg, I must still drive 20km to and from the nearest CNG station. I would be better off pumping petrol.
