Fuel prices unchanged until Feb 'at least'

Oil may have nosedived in price in recent days, but there will be no reductions on the petrol station forecourts until at least February.

Last June, Enemalta purchased its entire diesel and petrol requirements for the rest of the year, a spokesman for the Investments Ministry told The Sunday Times.

"If there is going to be movement in the market it will be in February or March of next year, namely after the January consignment has been priced," the spokesman said.

Oil prices fell below $70 a barrel for the first time in more than a year last Friday, amid worries that a global recession will erode fuel demand.

Last June, Enemalta committed itself not to review the prices for unleaded, lead replacement petrol and diesel before the end of this year. As fuel prices rocketed at the time, Enemalta said it had sought to retain some stability by purchasing petrol and diesel in advance and covering the cost till the end of the year.

Asked whether the drastic drop in oil prices - from $147 in July to below $70 last week - would prompt a rethink, the ministry said: "Enemalta does not purchase crude oil and crude oil is not sold at the oil pumps. So the market you should be looking at is that of petrol and diesel in the Mediterranean. Furthermore, price movements normally take two to three months to work themselves into the retail market."

The last fuel price revision took place in June when the price of unleaded and lead replacement petrol increased by €0.107 per litre, reaching €1.197 and €1.267 respectively. Enemalta had said it managed to close a contract on the purchase of fuels towards the end of April, when the market had eased somewhat and before prices soared again in the following two months. This translated into a 14 per cent decrease in the price for consumers, compared with prices at the time.

Seeing the dramatic drop in oil prices, a number of countries around the world have now started reducing petrol prices for vehicles.

Last Thursday, British Prime Minister Gordon Brown urged retailers to cut petrol prices to reflect the drop in the oil price. He said that retailers had no excuse for charging high prices.

The British prime minister's statement did not fall on deaf ears: On Friday, Tesco became the last of the big four UK supermarkets to cut petrol prices to below £1 a litre.

The international spike in oil prices in the past year had also forced Air Malta, like most other airlines, to increase its fuel surcharge. But the national airline has chosen to adopt a wait-and-see attitude before revising its fuel surcharge, the cheapest of which is €22 a passenger.

"Air Malta is closely monitoring the situation. However, the current international state of affairs is still too volatile to take any firm decisions at this stage," a spokesman told The Sunday Times.

In fact, while the recent drop in oil prices has been the sole beacon of hope in a world in crisis - the reprieve may only be temporary.

Pressure is mounting within the Organisation of the Petroleum Exporting Countries (OPEC) to reduce supplies as oil prices have fallen more than 50 per cent from July's record high. OPEC will hold an emergency meeting on Friday in Vienna to discuss the impact of economic weakness on oil markets.