DIESEL SHORTAGE

Mr Hwang Soo Jin asked the Minister for Trade and Industry what are the causes for the apparent shortage in the supply of diesel oil recently; whether there is any truth in the allegation of hoarding; and what measures are being taken to ensure continuity of supply.

Mr Hon Sui Sen (for the Minister for Trade and Industry): Mr Speaker, Sir, the shortage in the supply of diesel in Singapore is the direct result of the global oil shortage. The Ministry of Trade and Industry has issued a statement to the public in the earlier part of this week explaining the causes of the shortage and the measures that have to be taken. I will now elaborate on this Statement.

Diesel sold at the pumps for the first half of this year has gone up by 27% over the same period last year. This is much faster than the average rate of increase of 9% for the previous three years. The surge in demand is due to a number of factors. Firstly, the economy is growing at a faster pace than last year. Secondly, more Singapore registered diesel vehicles are on the road. As at January 1979, the number of such vehicles totalled 33,200, an increase of 15% as compared with the increase of 9% a year before. Thirdly, more lorries are also coming into Singapore from across the Causeway because of increased trade with West Malaysia. This trade has grown by 27% this year as compared with 6% last year. The increased number of lorries coming in is compounded by their abnormal purchases of diesel from Singapore because of a diesel shortage in Malaysia. Finally, prices at the pumps are lower than the prices paid by industrial consumers. Some industrial users are suspected to have been buying from the pumps.

On the supply side, the world's supply of crude oil has fallen short of demand by about 5% since the Iranian crisis at the beginning of the year. Oil companies have in recent months been unable to supply sufficient quantities of diesel to the pumps to satisfy the surge in demand.

Hoarding

Hoarding occurs whenever there is a shortage of any goods. I therefore believe that there is some truth in the allegation of hoarding.

Measures

We have asked the oil companies to try and supply additional diesel to the pumps. In the short term, they can be expected to meet our request. In the longer term, we cannot expect to obtain additional supplies easily and cheaply because of the global oil shortage. We must, therefore, adjust our consumption to the available supply in future and change our life-style accordingly. The customs duty of 6 cents per litre imposed on diesel sold at the pumps in the earlier part of this week will help to encourage economy of consumption as well as eliminate the price differential between industrial diesel and diesel sold at the pumps.

As oil companies are restricting supply of diesel to the Singapore market, we have to control purchases by non-Singapore registered vehicles to ensure that they do not buy abnormal volumes of diesel from Singapore. They will be allowed to buy limited quantities from a few licensed petrol kiosks.

Since there is a global oil shortage, we cannot expect supply to be always adequate to meet our requirements. However, the above measures should help to ease shortages if we adjust our life-style accordingly, and curtail our consumption.