Cooking gas prices to increase as fuel costs bite, but some hawker centres spared

SINGAPORE — Cooking gas prices in Singapore have risen due to higher fuel costs linked to the conflict in the Middle East, adding to a growing list of items that have become more expensive here.

Further price increases are expected as the full impact of higher fuel costs feeds through, although some providers may absorb the costs for hawker centres.

Households in Singapore use either piped town gas or liquefied petroleum gas (LPG) in cylinders, which have different pricing systems.

Town gas, supplied by City Energy and regulated by the Energy Market Authority, is manufactured centrally from fuels such as natural gas. Its tariffs are reviewed quarterly based on input fuel costs, which means they rise when global oil and gas prices increase.

LPG, by contrast, is sold by retailers such as Union Gas and Esso LPG at market-driven prices that reflect global gas costs and competition.

Higher oil and gas prices due to the Middle East conflict have raised the cost of producing town gas and the price of LPG.

Checks by The Straits Times showed that Union Gas and Esso LPG are now charging $37 and $38 respectively for a 12.7kg cylinder of gas commonly used by households.

Teo Hark Piang, chief executive of Union Gas, said any price increases now will be driven by higher transportation expenses.

Higher prices can be expected moving forward, but the increases are likely to be manageable for now, he said, noting that a standard-size cylinder usually lasts a typical household about a month. However, the price hikes could be "very significant" if the war continues.

The company - which distributes LPG to homes in older housing estates as well as to commercial eateries, among other customers - has kept prices unchanged for hawker centres to support stallholders, absorbing the cost increases instead.

However, small price adjustments will be made for privately run coffee shops and foodcourts, which typically have stronger margins, Teo said.

He added that Union Gas is committed to keeping prices stable for hawker centres, given their tight margins and role in providing affordable food.

The company currently serves around 50 to 60 government-run hawker centres in Singapore, and has not raised prices for this segment for the past decade.

"If hawker centres raise prices, consumers have few cheaper alternatives," Teo told ST, adding that meals at hawker centres can often be more affordable than cooking at home for small families.

He said the company has been in the LPG business for about 50 years and has weathered multiple oil price cycles, including sharp spikes and declines.

"There are periods when oil prices are low and we make a decent profit, but when prices spike, there are times we do not make any money from hawker centres. Over time, this balances out and we remain profitable."

Households using town gas can also expect a bigger bill from April 1.

On March 31, City Energy said the town gas tariff will increase by 0.24 cent per kilowatt hour (kWh) to 21.92 cents per kWh before goods and services tax (GST), for the period from April 1 to June 30.

The fuel cost component of the town gas tariff for each quarter is set using the fuel price average in the first 2.5 months in the quarter before.

As the tariff for April to June is based on fuel prices from Jan 1 to March 15, it only partially reflects the recent spike in fuel prices following the Middle East conflict, which started on Feb 28.

This means that the town gas tariffs in the subsequent quarters are expected to increase even further as the full effect of the elevated fuel prices is incorporated, City Energy said.

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This article was first published in The Straits Times. Permission required for reproduction.