Hong Kong households may soon face higher electricity bills, as the conflict in the Middle East ties up oil and liquefied natural gas supplies and pushes up fuel costs.

Speaking to reporters after a Commercial Radio programme, Billy Mak, an associate economics professor at Baptist University, said electricity bills in Hong Kong reflect fuel costs through the Fuel Adjustment Clause.

"Yesterday, the oil price was about US$90 per barrel. This is pretty high because a month ago, the oil price was just about US$50 to US$60," Mak said.

"So in the near future, we can foresee that our electricity prices will increase because the fuel cost adjustment account will increase," he added, referring to the monthly tariff adjustment.

The clause reflects the difference between the projected and actual fuel costs for Hong Kong's two electricity providers, Hongkong Electric and CLP Power.

Mak warned the cost of a barrel could surge to US$100 or even US$150, saying that when the Russia-Ukraine conflict broke out four years ago, oil hit US$120 per barrel.

Oil prices have risen about 30 percent this week. About 20 percent of the world's oil and liquefied natural gas supplies are shipped through the Strait of Hormuz between Iran and Oman.

Meanwhile, Chairman of the Hong Kong Shippers' Council Peter Hui told reporters that air-freight costs had increased by at least 20 to 30 percent due to the Middle East conflict, especially since airports in Dubai and Qatar are vital transhipment hubs for shipments from Asia to European countries.

Import and export sector lawmaker Tommy Chung, though, was more optimistic. Also speaking after the same programme, he said that even though the conflict was a hindrance to traders in the short run, he believed it would be business as usual once hostilities ended.




Edited by Robert Kemp