Caltex reintroduces 92-octane fuel, pricing it below rivals' and possibly starting new price war
Christopher Tan, Straits Times 16 Mar 09;
CALTEX has reintroduced 92-octane, the cheapest grade of petrol, at its pumps here in response to the economic downturn.
This grade of petrol, which disappeared from its stations in 2000, is now back at the pumps at its Pasir Panjang, Bukit Merah and Alexandra stations. All 33 stations of the smallest oil company here will have it by March 24.
Not only that, Caltex is pricing its 92-octane at $1.536 a litre before discount - 2.2 cents lower than its rivals, making it the cheapest petrol here.
This advantage is, however, expected to be shortlived as other players are likely to match its rate eventually.
Mr John Sam, retail manager at Chevron Singapore, which markets the Caltex brand, said of the company's decision to bring back 92-octane: 'For some motorists, driving is a necessity and may even be a form of livelihood.'
Pumps dispensing 92-octane have become harder to find in recent years. After Caltex dropped it from its pumps nine years ago, oil giant Shell began reducing its number of such pumps gradually.
A Shell spokesman said this was because demand for the petrol grade was low, at 5 per cent to 6 per cent of total petrol sales. 'Our stations are therefore geared up accordingly,' he said.
The Consumers Association of Singapore (Case) was critical of this practice of cutting back on the choice consumers would otherwise have had.
Case executive director Seah Seng Choon said: 'In a difficult economic situation like this, motorists will be looking for ways to lower cost. Petrol companies should show their social responsibility and ensure that low-cost fuel is easily available at their stations.'
Chevron Singapore could not say why it dropped 92-octane in 2000, but observers reckon it could have been due to motorists then favouring higher-octane fuels.
But the tide has turned in favour of the more environmentally friendly 92-octane. Even performance vehicle maker BMW has confirmed that all its cars here can run on it.
Industry consultant Ong Eng Tong, an advocate of lower-octane fuels, said: 'Most cars do not need high-octane fuels. With better education and soaring prices in recent years, motorists are moving away from high-octane petrol.'
Data from the Ministry of Trade and Industry confirmed this trend. Last year, sales of 92- and 95-octane fuels grew 13 per cent and 14 per cent respectively, while 98-octane sales shrank by 18 per cent.
The two lower grades accounted for 64 per cent of sales last year. As recently as 2005, 98-octane sales outstripped the sale of 92 and 95 combined.
ExxonMobil is one oil company that has kept its number of dispensers for 92-octane. With the exception of two kiosks at Lavender and Guillemard, all of the company's stations here devote an equal number of dispensers to each grade.
The company's retail manager here, Mr Loh Chee Seng, explained that this is typical of the company's stations worldwide, and that its policy is to give consumers choice.
For Caltex, the move to bring back 92 is at the expense of 98-octane petrol as 92 will be dispensed at pumps previously used for 98.
The company has fired another salvo in what could be the start of a petrol price war - by pricing its 'ultra-premium' Platinum 98 at its regular 98-octane rate - a cut of about 17 cents a litre. This fuel has long been priced alongside Shell's V-Power, the other 'ultra-premium' grade of petrol.
Mr Sam said: 'With the challenging economic climate, we want to bring more choice and savings to customers.'
The move could affect Chevron's profit margins, as 92-octane petrol is about 15 cents cheaper per litre than 98-octane fuel. But the company reckoned this would be more than made up for by a higher volume of sales.
With Caltex's reintroduction of 92, about 23 per cent of Singapore's 6,603 petrol pumps will dispense the grade, up from 21.5 per cent.
