Singapore’s industries well insulated against oil price changes

Oil prices have remained high in recent weeks, keeping near US$70 a barrel.

In Singapore, basic market forces have already made an impact in encouraging the use of oil alternatives.
Khoo Chin Hean, chief executive of Energy Market Authority, said: “We were powered by oil. But over the last five to six years, we’ve made the switch to gas. The market will drive us to something that is cost efficient. By using gas, I notice it has helped to maintain downward pressure on electricity price.”

David Ernsberger, Asia editorial director of Platts, said: “Industries that consume oil have largely moved out of Singapore or they’re rationalising their businesses in some other way. Singapore is a service-based and a knowledge-based economy these days. So Singapore is very well insulated against this volatility in oil prices by not having these energy-intensive parts of the economy.”

As for industries that are dependent on oil, such as airlines and shipping, analysts said the increased costs have been mitigated by buoyant growth.

Mr Ernsberger said: “For the Singapore economy, it’s almost like oil prices don’t even exist because the GDP growth in this country has been far ahead of expectations. And I think the higher oil prices grow, the faster the Singapore economy grows.

“In fact, not only will the economy not slow down, it will probably continue to grow quite quickly throughout this period of high oil prices.”

Channel News Asia