PHNOM PENH (Khmer Times) – The global decline in gasoline prices has yet to help consumers’ wallets here, where the biggest gas companies continue charging high prices at the pump. After a sharp drop in prices in January, the cost of gasoline rebounded from $1.15 per liter in February to $1.29 in July, according to the consumer price index, while the global price for crude oil plunged to the lowest levels since 2009.
As gas companies continued to charge high prices despite the drop in price per barrel, the government intervened in early September. The Ministry of Commerce ordered companies to introduce a new pricing mechanism to keep prices here in line with global prices.
The government has also stepped up monitoring of the country’s largest oil companies, holding meetings with company officials every 10 days to discuss pricing. Facing increased scrutiny, last week the companies announced a new, more flexible pricing system that would bring down the price of gasoline. But it may be weeks before prices actually drop.
Some analysts have welcomed the government’s decision to take a more active role in the industry. “Governments can interfere when the market does not function,” said economic analyst Srey Chanthy. “The Cambodian Constitution enables the government to act or intervene for national welfare.”
But some government officials say the high prices are simply a by-product of the country’s relatively small reserves, not of gas companies exploiting customers. “We are a very small country with a small volume of consumption plus a small volume of stock,” said government spokesman Phay Siphan. Small reserves mean companies must charge higher prices, he said.
But other analysts said gas companies were taking advantage of minimal government regulation to boost profits during the global drop in oil prices, without passing on savings to customers. As the price per barrel dropped, Cambodian prices remained stable. Only when the government demanded a price drop did prices fall.
Some politicians accused the gasoline companies of behaving like a cartel by agreeing not to reduce prices. “There has been concerns among [politicians],” said Mr. Chanthy, “but there is no concrete evidence that can prove [wrongdoing].”
The Ministry of Commerce plans to create a committee that could supervise gas companies. “If they find proof of [wrongdoing], then the Ministry of Commerce will act,” said Dith Thina of the Ministry of Mines and Energy.
While the government has placed more pressure on gasoline retailers to drop prices at the pump, the efforts have had limited effects. The new pricing mechanisms will likely not affect prices until later this year. Spokespeople from Caltex and Total could not be immediately reached for comment on when the price drops may come.
The Commerce Ministry is working on a draft law that would regulate competition between businesses in the gasoline sector, preventing them from forming cartels or keeping prices artificially high. The new law will likely not come for a vote until next year, said Mr. Chanthy.
Meanwhile, high gas prices continue taking a toll on businesses and consumers in Cambodia. “The price [of expensive gas] is that Cambodian businesses… cannot compete on cost,” said Mr. Chanthy.
After a sharp decline at the beginning of the year, gas prices here rebounded while prices elsewhere, such as in Thailand, continued falling. Graphic: Jonathan Cox