WE REFER to the letters, 'Pump prices - eight hikes in eight months' by Mr Benjamin Tay last Thursday and 'Price hikes: Oil firms should speak up ' by Ms Lim Li Ching on Monday regarding pump prices. We fully understand the concern motorists are feeling over high pump prices. We have spoken up in the past and take this opportunity to clarify the points raised in the letters.

Pump prices are affected by many factors. A key component which makes up about 50 per cent of pump prices is the cost of petrol and diesel. This cost, known as wholesale fuel prices, is traded internationally at commodity markets and is not set by ExxonMobil. Like other internationally traded commodities, wholesale fuel prices are the result of the actions of thousands of buyers and sellers operating in a global marketplace to efficiently allocate available supplies for competing uses. The same applies to crude oil prices.

Our refinery in Singapore purchases over 90 per cent of the crude oil it processes from third parties and is subject to market fluctuations. Wholesale fuel prices, although a key component, are not the only determinant of retail pump prices. The other factors are taxes and duties which make up about 30 per cent of pump prices, and the remaining 20 per cent comes from land, operating costs and margins.

We operate in an intensely competitive retail market in Singapore. Competition is beyond pricing and we also compete by investing heavily in our Smiles loyalty programme and recently completed our alliance project with NTUC FairPrice, bringing more value and convenience to our customers. High prices raise our awareness of the importance of saving energy and changing our behaviour.

Some good ways for motorists to improve fuel efficiency include avoiding aggressive driving; planning your trips in advance; and inflating your cars' tyres to the right pressure. Switching to a fuel grade recommended by your cars' manufacturers also helps. We have noticed that more than 10 per cent of our customers have switched from 98 octane petrol to the lower 95 octane petrol over the past two years. Our website at www.exxonmobil.com.sg has more energy-saving tips.

Lastly, we wish to state categorically that we at ExxonMobil support free and fair competition. As a company policy worldwide, we do not discuss prices nor market segmentation with competitors. We also do not subscribe to nor support any anti-competitive activities.

Loh Chee Seng
Singapore Retail Sales Manager
ExxonMobil Asia Pacific Pte Ltd