By Dr. Kevin Lau
The escalating conflict involving the United States, Israel, and Iran has sent shockwaves through global oil markets, with crude oil prices surging to nearly $120 per barrel at one point. As a highly open economy, Hong Kong cannot remain insulated from such external shocks. While the city benefits from the strong backing of the nation—with approximately 80 percent of petroleum products sourced from the mainland, ensuring no risk of energy shortages—the sustained volatility in local fuel prices has directly impacted transport and related industries. Recognizing the severity of the challenge, the Chief Executive promptly directed the establishment of the Inter-departmental Monitoring Group on Fuel Supply, led by the Financial Secretary and comprising the Deputy Financial Secretary, Secretary for Financial Services and the Treasury, Secretary for Environment and Ecology, Secretary for Commerce and Economic Development, Secretary for Transport and Logistics, the Government Economist, and the Chairman of the Competition Commission.
Since its inception, the Group has implemented four key measures to stabilize the situation. First, the government maintains close communication with the central government and mainland authorities to ensure stable energy supply under national support. Second, it requires local stakeholders, including major vehicle fuel suppliers, the two power companies, and Hong Kong and China Gas Company Limited, to maintain stable fuel supplies. Third, to enhance market transparency, the Environment and Ecology Bureau began publishing weekly data on April 1, tracking the seven-day moving average retail prices of unleaded petrol and diesel after discounts, alongside international market benchmarks. The Competition Commission has also engaged with fuel companies to emphasize fair competition and transparency, closely monitoring for collusion or unfair practices. Fourth, the Group continues to monitor international developments dynamically, assessing impacts on Hong Kong's industries and formulating contingency plans for timely intervention.
Following careful evaluation, the Group recommended four targeted temporary support measures on April 9, which the Chief Executive endorsed. These demonstrate a precise balance between fiscal prudence and timely assistance. First, a HK$3-per-liter subsidy for diesel for two months, involving an estimated expenditure of approximately HK$1.8 billion, supporting commercial vehicles, vessels, and related industries using diesel, thereby reducing operating costs and pressure to raise prices. The government will work with the Competition Commission to monitor fuel company pricing to prevent profiteering. Second, a 50% toll reduction for all commercial vehicles (excluding private cars and motorcycles) at government tolled tunnels for two months, involving estimated forgone revenue of about HK$160 million. Third, establishing the Public Transport Services Special Applications Task Force to expedite assistance applications from public transport operators (including buses and ferries) to flexibly address rising fuel costs, including considering service integration and energy-saving measures. Fourth, continued dynamic monitoring of the situation and oil price fluctuations, with measures adjusted as circumstances evolve.
In designing these measures, the government adhered to five principles to ensure prudent use of public funds: targeting industries most severely affected and involving public services; handling price-controlled services within existing approval mechanisms; excluding private vehicles from primary consideration as they involve personal choices with alternatives; maintaining temporary and time-limited measures to avoid fiscal risks given the unpredictable conflict duration; and prioritizing public transport services, school buses, and estate buses severely affected by diesel prices. This approach differs fundamentally from the extensive relief measures during the COVID-19 pandemic, as current circumstances warrant more targeted support for critical sectors rather than broad-based assistance.
Crises often breed opportunities. The Financial Secretary has noted that Hong Kong's lack of foreign exchange controls, free capital flow, and stable currency peg to the US dollar position the city as a "safe haven" for capital inflows. With the mainland economy growing steadily and numerous quality enterprises listing in Hong Kong, investors find abundant opportunities here. Geopolitical shifts have also redirected air cargo routes between the Middle East and Europe through Hong Kong, reinforcing its status as an international aviation hub. The Secretary for Transport and Logistics, Ms. Mable Chan, has highlighted Hong Kong's role as a crucial transshipment port, with cargo previously routed through Middle Eastern airports now potentially moving through Hong Kong to Europe, North America, and Southeast Asia. With the completion of the airport's Three-Runway System and the commissioning of Terminal 2 on May 27, capacity will increase significantly. Furthermore, Hong Kong's port efficiency—handling cargo in less than one day on average—has earned it the moniker "catch-up port," allowing it to mitigate disruptions in global shipping supply chains, with some vessels already choosing to unload cargo temporarily in Hong Kong.
In summary, facing energy price shocks from geopolitical tensions, the SAR government has demonstrated strategic foresight and comprehensive planning through targeted, agile responses. The subsidy measures require approval from the Legislative Council's Finance Committee, and it is hoped that legislators will support their swift implementation. Hong Kong should seize the opportunities presented by the regional conflict to enhance its position as a capital safe haven and logistics hub. With national support, high-level security, and efficient operations, the city can further consolidate its status as an international financial, shipping, and trade center—turning crisis into opportunity and advancing steadily toward a prosperous future.
The author is Founding Convenor of the Hong Kong Global Youth Professional Advocacy Action, a specialist in radiology, Master of Public Administration of the University of Hong Kong, Master of Public Health of the University of Hong Kong, and an adviser of the Our Hong Kong Foundation.
The views do not necessarily reflect those of DotDotNews.
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