Tuesday, November 25, 2008

Actual Cost of Petrol Price

What sort of commercial price that the Minister of Domestic Trade and Consumer Affairs was referring to? The commercial price is the price where the petrol stations has to pay to the oil depots as outlined below.

Oil depot price is the crude oil (at world price) that has been processed at oil refinery and it reflects the actual product price as produced by the oil refinery.


Commercial price on 15 Sept 2008 (there was a typo mistake in the chart) was at RM2.81, petrol stations were retailing petrol at RM2.55 and thus the actual subsidy was only RM0.26 per litre instead of RM0.30 as claimed by the government all the time. At least there were some subsidies as otherwise we would be paying more.

As you go down the chart, commercial price was cheaper than petrol retail price from 10 Oct 2008 onwards.

By 23 Oct 2008, the commercial price at oil depots was RM2.00 (at which the world crude oil price was at US$64.15) and with the claimed subsidised rate of RM0.30, the actual petrol price should have been retailing at RM1.70 but then the consumers were still paying the price of RM2.30. This was RM0.60 above the subsidised rate if there was any at all.

As had been revealed by the government, the petrol station would have earned RM0.12 per litre with the respective petroleum companies earning RM0.19 per litre too even at the retail price of RM1.92. It did mention that at RM1.92 less (RM0.12 + RM0.19) = RM1.61, the government would still have earned profits. Why? Because commercial price has dipped way below RM1.61 by now.

If the government was still earning profits, what was the government subsidising then? This question is being posed based on pre-June 2008 (the then 41% price increase) as even then the government was gladly saying that they were subsidising petrol price. Not that people or even me are asking for more subsidies but the government said it was subsidising all this while ................ who's bluffing who or what was missed out? What is the government's agenda in not telling truth?

Please bear in mind that the government did mention that effective 1 Nov 2008, the RM0.30 subsidy has ceased. By looking at the chart, we doubt so.

The current Deputy Prime Minister has prepared the hearts of all Malaysian citizens by saying "Don't expect pump prices to be constantly reduced". He has said that the government has to review whether to reduce the petrol price to match the drop in world crude oil price. Why must the government review when the prices drop but didn't even consider properly when they increased the price by 41% at one go in June 2008?

He mentioned that "We cannot afford this kind of volatility. The people may not be able to cope with these sudden changes." Please enlighten us, who are the "people" that you were referring?

Reading: Malaysians are now paying petrol tax - Malaysian Insider

Related post - Is Malaysia's Fuel Price Cheaper?
Tags: Petrol Price, Fuel Price, Oil Depot Price, World Crude Oil Price, Malaysia, Minister of Domestic Trade and Consumer Affairs, Petrol Station

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9 Comments:

Blogger -eiling- said...

with the world's crude oil prices dropping, I think in actual fact, the government is not subsidising any of our petrol right now. The "saved subsidies" was invested into projects. And from these projects, someone is bound to benefit from them i think.

25 November, 2008 10:07  
Blogger Johnny Ong said...

eiling - they have confirmed on the "no subsidy" at the moment. well, this is what they call political survival game

25 November, 2008 13:47  
Blogger Kevin said...

Hi Johnny,

I love this statement: "Why must the government review when the prices drop but didn't even consider properly when they increased the price by 41% at one go in June 2008?"

It makes perfect sense. Whenever something benefits the government (read: certain people in the govt.), there are no second thoughts about it. Example, the Eurocopter deal. But when people are not happy, then only they'll do something about it. Yup, that's typically govt. work culture. Spending lots of money is #1 on their agenda.

The price of fuel has reduced 4-5 times since it's 41% increase in June. What happens if world fuel price goes up again? It's like playing the hide-and-seek game.

25 November, 2008 13:47  
Anonymous Calvyn said...

petrol price are drop now, but all the daily use are still so expensive.... those business actually make a lot money from there

25 November, 2008 16:43  
Blogger acura said...

They are no longer subsidizing but making a profit from it. Nobody knew what will happen to the money 'saved'

25 November, 2008 17:20  
Blogger Johnny Ong said...

kevin - well, if it goes up then it's just too bad ..... the petrol price has to reflect it too

calvyn - that's the main issue ... petrol price drop doesn't mean it has helped the nation right now

acura - hopefully it's used for meaningful purpose for the public at large

26 November, 2008 19:25  
Blogger Simon Ho said...

the profits i bet are put into "development" programs for the trust fund of our wise government officers

26 November, 2008 22:30  
Blogger Johnny Ong said...

simon - with pun intended there? haha

28 November, 2008 05:42  
Blogger nick said...

know the real truth behind fluctuating prices of petroleum www.petrolprice.blogspot.com

12 July, 2009 18:18  

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