Soaring energy costs impact aviation, transportation, and fishing sectors

A historic surge in oil prices is hitting more than just gas pumps — it is rattling departure gates and straining dining tables. As the upheaval spreads, stakeholders in Hong Kong are bracing for impact and urgently calling for relief measures.

The escalation of military conflict in the Middle East, ignited by a US-Israel strike on Iran in late February, has propelled global crude oil prices to heights unseen in years. On Monday, Brent crude was trading at $114.78 a barrel, capping a week that saw the price spike by 28 percent.

In the Hong Kong Special Administrative Region, the transportation sector is feeling the sting of constrained energy supplies, particularly after Iran’s blockade of the Strait of Hormuz — a narrow chokepoint through which one-fifth of the world’s oil was flowing before tensions flared up.

READ MORE: Hong Kong Airlines announces surcharge hike amid Gulf conflicts

The city’s average retail price for premium petrol surged by nearly 30 percent over the past 10 days, according to data from the Consumer Council.

For diesel, the depot pickup price has more than doubled in a fortnight — leaping from about HK$4.9 ($0.63) per liter to roughly HK$10.6, said Stanley Chiang Chi-wai, chairman of the Hong Kong Land Transport Council.

If a light truck holds a 50-liter tank and refuels every three days, drivers now face an additional monthly expense of several thousand Hong Kong dollars, Chiang said.

Self-employed truck drivers — who make up about 20 to 30 percent of the sector’s workforce — stand to bear the brunt of this volatile price swing. “They don’t have the buffers that large companies do to absorb rising costs,” said Chiang.

Some transportation firms have turned to surcharges to ease the pressure, but Chiang said that more relief measures could be introduced until oil prices stabilize. Potential measures include cutting vehicle license fees and reducing parking charges at government-run lots.

Ripple effect

The pain is now spreading from tarmac to runway as jet fuel prices also surge.

On Tuesday, Hong Kong Airlines announced it is increasing its fuel surcharge from Thursday on its short-haul and long-haul routes, with a maximum increase of HK$150 per one-way ticket.

The surcharge for flights to the Chinese mainland will edge up HK$5 to HK$190, and Taiwan routes will increase by HK$20, to HK$182. For Japan, South Korea, and Southeast Asia routes, surcharges will increase by HK$50 to HK$212, representing a 31-percent hike.

For long-haul flights, travelers to the Maldives, Bangladesh and Nepal will pay an extra HK$100, bringing the surcharge to HK$384; while surcharges for North America, Europe, the Middle East and Africa routes will spike from HK$589 to HK$739.

Cathay Pacific has not announced any fare changes yet but said it reviews fuel surcharges each month, considering jet fuel prices and operational factors. Greater Bay Airlines said it will review its surcharges following established procedures.

William Chan Kit, executive director of Glyder International Group Ltd, which operates aviation-related businesses, said it is only a matter of time before rising oil costs ripple through air-cargo transport. He advised the government to strengthen market oversight during this extraordinary period to prevent suppliers from artificially inflating prices.

Meanwhile, the oil surge is grounding fishing vessels at port, casting a shadow over the city’s neon-lit restaurants and home kitchens.

Stephen Chui King-hang, chairman of the Hong Kong Fishermen’s Youth Association, estimates that about one in 10 of the city’s fishing boats and vessels have suspended operations as the price of marine diesel has more than doubled over the past few days — from HK$990 per barrel to over HK$2,000.

The halt in fishing not only slashes fishermen’s incomes but also forces many deckhands to seek work elsewhere, deepening a manpower shortage in the sector, Chui said.

ALSO READ: Asia-Pacific braces for oil crisis amid Mideast tensions

“If oil prices keep climbing in the coming weeks, the prices of certain fish at wet markets could jump significantly,” Chui said. He urged authorities to consider reducing annual tonnage charges and other administrative fees to help the fishery sector weather the cost surge.

For those not yet directly affected, preparations are underway to cope with rising costs.

Ho Chi-keung, director of the taxi driver branch of the Motor Transport Workers General Union, said the impact on the taxi industry has been limited so far, as most taxis run on liquefied petroleum gas (LPG) or electricity.

LPG prices are adjusted monthly, so any hike will not bite until next month, Ho said, adding that the industry may apply for a fuel surcharge if gas prices surge significantly.

Contact the writers at williamxu@chinadailyhk.com