Why were more LPG pumps reported broken at the designated pump stations when the world price of LPG went up? Ka-fu Wong University of Hong Kong
1 Ka-fu Wong University of Hong Kong Why were more LPG pumps reported broken at the designated pump stations when the world price of LPG went up?
Cleaning the air a Pollution had become a major concern in hong kong and while little could be done about factories across the border actions were taken at home. In his 1999 policy address hong Kong chief executive tung Chee Hwa announced measures to tackle the territory's deteriorating air quality I A 1998 trial of 30 Hong Kong LPG taxis found that they performed comparably well to diesel taxis, Cost about the same to maintain emitted extremely low emissions"and were virtually free of smoke" Crucial factors to consider were the effect of fuel price on operating cost and the sufficient availability of filling stations and maintenance shops. Encouraged by the results the government set out to convert the territories diesel powered taxicab fleet Efforts were made to ease the transition with incentives offered to owners, drivers and fuel suppllers 2
2 Cleaning the air ◼ Pollution had become a major concern in Hong Kong and while little could be done about factories across the border, actions were taken at home. In his 1999 policy address Hong Kong chief executive Tung Chee Hwa announced measures to tackle the territory’s deteriorating air quality. ◼ A 1998 trial of 30 Hong Kong LPG taxis found that they performed comparably well to diesel taxis, cost about the same to maintain, emitted “extremely low emissions” and were “virtually free of smoke”. Crucial factors to consider were the effect of fuel price on operating cost and the sufficient availability of filling stations and maintenance shops. Encouraged by the results, the government set out to convert the territories diesel powered taxicab fleet. Efforts were made to ease the transition with incentives offered to owners, drivers and fuel suppliers
Incentives offered to owners drivers and fuel suppliers To encourage the switch from diesel to LPg, the import of new diesel taxicabs was banned and taxi owners were offered H$40,000 each for the purchase of new LPG vehicles All oil and gas firms were welcomed to submit bids to design build and operate"filling stations selling only LPG priced according o a government designed and implemented pricing mechanism. In exchange for signing a 21-year contract to sell at or below capped prices, companies received development land at zero cost. These dedicated station" contracts were awarded based on the lowest operating price. No duties were levied on LPG sales
3 Incentives offered to owners, drivers and fuel suppliers ◼ To encourage the switch from diesel to LPG, the import of new diesel taxicabs was banned and taxi owners were offered HK$40,000 each for the purchase of new LPG vehicles. ◼ All oil and gas firms were welcomed to submit bids to “design, build, and operate” filling stations selling only LPG priced according to a government designed and implemented pricing mechanism. In exchange for signing a 21-year contract to sell at or below capped prices, companies received development land at zero cost. These “dedicated station” contracts were awarded based on the lowest operating price. No duties were levied on LPG sales
The pricing formula at dedicated filling stations a the formula (= at b was comprised of the LPg international price(a)and a LPG operating price(B). Ceiling prices were set based on the international free-on-board price-updated once every six months-with additions made for operating costs and profit margins. Determined by the operators when they tendered their original station contract bids, the LPG operating price operating cost and profit margin"component was updated once a year in-line with the composite consumer price index Free-on-board: " FOB prices exclude all insurance and freight charges.effectively priced at the loading port"(platts. com). The Saudi aramco LPG contract price was commonly quoted for trade in asia
4 The pricing formula at dedicated filling stations ◼ the formula (P = A + B) was comprised of the LPG international price (A) and a LPG operating price (B). Ceiling prices were set based on the international free-on-board price – updated once every six months – with additions made for operating costs and profit margins. Determined by the operators when they tendered their original station contract bids, the LPG operating price “operating cost and profit margin” component was updated once a year in-line with the composite consumer price index. Free-on-board : “FOB prices exclude all insurance and freight charges…effectively priced at the loading port” (platts.com). The Saudi Aramco LPG contract price was commonly quoted for trade in Asia
Changes in LPG prices 3.50 3.00 2.50 2.00 邮 1.00 0.50 8至号豆豆8总号总喜荡 International Non-Dedicated stations Dedicated stations
5 Changes in LPG prices 0.50 1.00 1.50 2.00 2.50 3.00 3.50 D-00 M-01 J-01 S-01 D-01 M-02 J-02 S-02 D-02 M-03 J-03 S-03 D-03 M-04 J-04 S-04 D-04 M-05 J-05 S-05 D-05 HK$ per Litre International Non-Dedicated Stations Dedicated Stations