[Report] ComfortDelGro, Singapore's largest cab operator, will be removing the 30-cent diesel surcharge on taxi rides with effect from 6am, November 12. The company said on Wednesday the move is in light of the recent decline in diesel prices and the weakening economic conditions.
The price of diesel price has dropped from S$1.83 per litre in July, when the surcharge was introduced, to the current S$1.38 per litre. ComfortDelGro said it would continue subsidising the cost of diesel for its drivers. It spent S$16.2 million on diesel subsidies in the first half of this year. Newcomer Trans-cab took the lead in announcing on Tuesday that it would remove the 30-cent surcharge on its taxi rides from November 11. Other taxi companies such as Premier Taxi said the removal of the surcharge will affect the driver's income, and therefore the matter is still being reviewed.
ComfortDelGro said its taxi associations support the move, but taxi drivers whom Channel NewsAsia spoke to said the move would have an adverse impact on their income. With the surcharge, taxi drivers who make at least 30 trips a day earn an additional S$9 or more. Taxi ridership has fallen by 7 per cent to around 921,000 a day from 991,000 in 2006. With the economic downturn, observers expect ridership to drop even more. The number of taxis plying the roads has, however, grown by 6 per cent in the last two years to about 24,400. [End of report]
When I first heard this news yesterday, I was obviously overjoyed. I believe you will share the same feeling too if you are someone like me, who prefer to take the cab more than the train or the bus. When the taxi companies here announced that they would introduce the 30-cent surcharge earlier, I think everyone was very disappointed because apart from that, we already had to cope with a higher cost of living. Everything was going up and up, and it is still happening now, but the price of oil however, has dropped significantly over the last few months or so. Let's leave from the topic of the taxis for a moment and focus on the bigger picture here. When the price of oil was on the upward trend, I thought that there was a high possibility that it might reach to the highs of $200 a barrel by year end. I mean it was just three months ago that the price of oil hit $147 per barrel. I think that the decline in the price of oil was contributed by many different factors. One of them was the decision to increase oil output by the Saudis in the middle of this year and the coming back of refining capacity of the U.S.'s Gulf Coast that was lost as a result of Hurricanes Ike and Gustav. Just to give you a picture of how steep the decline has been, the price of oil was traded at $70 a barrel just today, that is about half the amount in July. Things are going so good, that even the Organisation of Petroleum Exporting Countries (OPEC), decided at an emergency meeting in Vienna last week to slash output by 1.5 million barrels a day from November 1. And earlier this week, OPEC Secretary General warned it could cut output again if prices keep falling. OPEC produces 40 percent of the world's crude oil.
Of course the decline in oil prices is a good thing to hear, but it doesnt necessarily have to be that way. The bad news about the decline could be that the global economy is headed for a serious slump, which explains the less demand for oil, hence the drop in prices. As you all know, the future of the global economy is not looking too good right now, as a result of the credit crunch crisis that America is facing, which has since spread to the rest of the world. When a country dont have much money on their disposal, they will spend less, and that is precisely what is happening in the oil industry. Oil demand in the U.S. has dropped 10% in the few weeks for example and there is a worry by OPEC that there might be a slowdown in China as well, whose soaring economy this decade has sent oil prices rocketing. History have shown that in times like this, it is understandable to see why things have gone the way they did. I went to do some research and found out that in the last financial crisis, which ripped through Russia and not to mention Southeast Asia a decade ago, global consumption was cut by 1 million barrel per day. So its not always a good thing when the oil prices start to drop especially in a quick amount of time, just like when it went up earlier this year.
For me personally, I like to look at the positives instead of the negatives and the decision to remove the 30-cent diesel surcharge is great to hear, even though not all the taxi companies here have decided to do the same. The chances of you getting into a ComfortDelGro taxi is probably about in 8 out 10, so it doesnt really matter much if other taxi companies refuse to do the same. However, I am expecting all the taxi companies to the same though because the taxi industry in this country especially in particularly competitive in my opinion, especially during times like now. If they dont follow what the others are doing, they will quickly fall behind. I am just wondering why they didnt act sooner because the prices of oil did start to drop around early last month if Im not mistaken. I was starting to question the motives of the taxi companies here not to drop the 30-cent surcharge, that until yesterday of course. I am also wondering whether the decision was made really due to the fact that the price of oil has fallen or whether it is because their business is not doing good. Nevertheless, I believe it is a win-win situation both for the commuters and the taxi companies, because more people will probably be taking the taxi again now and we can save more. The 30-cent surcharge didnt matter much to me because I would rather pay that amount of money than to squeeze with the people on the train or the bus, but of course I will try to save when I can.
With the economy not looking good in the future, any decline is a good news. Im just hoping it will be the electricity bills next. My electricity bills for the last few months have increase by about 30% even though I have tried to save more energy than before. I went to ask other people and all of them told me that their bills have gone up too some by 50 to 60%! Living in Singapore is tough for someone who comes from a middle class family like me, I cant imagine how the lower income families are coping with their life now. One things for sure, its going to be a bumpy ride ahead, so be prepared and I will see you around soon.