Taxis Feel Oil Pinch

Source: The Standard

Hong Kong taxi drivers say they will be hard hit by record high world oil prices that will result in them paying about 10 percent more to fill up at the pumps.

US crude oil futures reached a record of US$93.20 (HK$726.96) a barrel yesterday, portending tough times for the transport and logistics industries in the SAR and the mainland.

Mexico halted one-fifth of its production and the US dollar struck new lows. London Brent crude also rose to US$89.44 a barrel.

Amid the surging price of crude, the Hong Kong government raised the ceiling prices at the city's dedicated liquefied petroleum gas filling stations, effective Thursday.

The adjusted prices will boost auto LPG prices to between HK$3.57 and HK$3.96 per liter, up from HK$3.23 to HK$3.61 per liter in October.

Urban Taxi Association Joint Committee chairman Kwok Chi-piu said taxi drivers will have to pay HK$180, or about HK$20 more, to fill up.

He claims cabbies who work on the Hong Kong Island side earn a net profit of about HK$300 per day, while those who ply their trade in Kowloon take home only about HK$100.

"HK$20 means a lot to us," Kwok told The Standard.

He said he will reiterate his group's new tariff proposal to the government - that is, to have the first two kilometers charged at HK$20 rather than the current HK$15, followed by HK$1 for every 0.2 kilometer instead of the current HK$1.40.

He said such a proposal could cover costs.

Meanwhile, Chamber of Hong Kong Logistics Industry chairman Steve Lo Wong-fung said operating costs soared 30 percent after oil prices jumped from US$70 to more than US$90 per barrel.

"Some logistic companies were forced to close down. If such a trend is to continue, that will be catastrophic for the industry," Lo said.

Federation of Hong Kong Industries deputy chairman Stanley Lau Chin-ho said many local companies with manufacturing plants - especially industries related to plastic and steel in the mainland - have been seriously affected.

"The surge in oil prices leads to at least a 10 percent rise in [operational] costs," Lau said.

Rising global crude prices have greater impact in the mainland, where authorities have been controlling the prices even if it erodes the profits of refiners.

According to a survey by the petroleum distribution committee of the Chinese General Chamber of Commerce, about 2,000 private gas stations refused to open for business amid the supply shortages simply because they cannot afford the losses involved.

According to Sina.com, among all 663 private petroleum wholesale firms, more than 200 have gone bankrupt.

Hong Kong government economist Kwok kwok-chuen said as the city is a service-oriented economy, it is relatively less energy-dependent than many other economies. (By Bonnie Chen and Kathy Wang)

Editor: Chen Wenli