When world gas prices increase, domestic prices rapidly follow, yet when world prices drop, the domestic price has tended to drop at a slower rate and by less.
The domestic gas price drop slower and less than world price
On May 31, deputy head of Business Department of Saigon Petro, Do Trung Thanh said, "From June 1, we will reduce by VND2,500 (USD0.12) per kilo." Following the price cut, a 12-kilo cylinder now costs VND340,000 (USD16.3)
Thanh said the price dropped VND30,000 (8%) because of a decline in the world gas contract price dropping by USD130 per tonne (16%).
In April and May the gas prices also dropped VND72,000 (15%) and VND35,000 (8.6%) per 12-kilo cylinder because world gas price dropped USD212.5 (17.6%) and USD140 per tonne (14%).
This was the third price cut since the beginning of 2012. However, it is very noticeable that the drops are always slower and less than the world price.
For example in January, the world price increased by USD85 per tonne (VND1,800 per kilo) and in Febuary it increased again by USD145 (VND3,000) then the domestic price rose VND2,000 and VND3,500 respectively. In March, the world gas price increased by USD180 per tonne (about VND3,800 per kilo) then the domestic retail price increased more than VND4,300.
Although the drop in world gas price since January until June is USD107.5 per tonne but the domestic price only dropped by VND5,000 for a 12-kilo cylinder (USD20 per tonne).