📈 Fuel Price Mitigation: Strategies to Cushion Consumers

Global oil prices have surged above US$ 100 per barrel due to Middle East conflicts. In mid-March 2026, Singapore benchmarks for petrol and diesel hit US$ 140 (+86%) and US$ 189 (+112%) respectively compared to February levels. Without intervention, domestic prices could skyrocket by up to 81%. • Projected Impact (Formula-based) • Petrol: Potential rise to Rs. 452 (+53% YoY) • Diesel: Potential rise to Rs. 540 (+81% YoY) • Risk: Sharp inflationary pressure on transport and essential goods. • Proposed Triple-Adjustment Pathway • Cost-Recovery Neutral: Treat administrative costs as fixed constants rather than percentages to stop price amplification during global spikes. • Fuel Tax Neutral: Apply a government subsidy to offset "unexpected excess tax" (VAT/SSCL) generated when landed costs rise, keeping net tax revenue stable. • Fiscally Neutral: Use additional VAT revenue collected from across the economy (due to fuel-led inflation) to further subsidize pump prices without hurting the national budget. • Economic Context These adjustments aim to maintain fiscal discipline and IMF cost-recovery commitments while preventing a cost-of-living crisis. This "both-and" approach ensures the CPC recovers costs without passing the full global shock to households and the ICT/BPM or manufacturing sectors.