The price of petrol has gone up because the price of refined petrol has increased, even though crude oil prices have dropped.
In refuting allegations by the opposition, the Barisan Nasional Strategic Communications Team said today Malaysians used refined petrol, not crude oil.
It noted that refined petrol prices might differ from crude oil prices due to global supply and demand factors.
Also, Malaysia uses a managed float system which is dependent on global petrol prices.
“Knowing that it is a managed float system, it is ridiculous that opposition leaders blame the government when petrol prices increase due to global market price increases but when petrol prices go down, they claim this is due to global prices and give no credit to the government,” said the statement.
It said MPs Dr Wan Azizah Wan Ismail (PKR) and Tony Pua (DAP) had pointed out that the crude oil price for January had dropped and that the ringgit did not weaken compared with the previous month when criticising the increase in petrol prices.
“We would like to inform both these Members of Parliament, the other opposition leaders and their propagandists that Malaysians do not pump crude oil into their cars.
“The majority of Malaysians pump refined petrol in the form of RON95 or refined diesel.”
The prices of RON95 and RON97 went up by 20 sen to RM2.30 (up 9.5%) and RM2.60 (8.3%) respectively, while diesel went up by 10 sen to RM2.15 (4.9%) today.
The statement said as part of the move away from inefficient blanket subsidies, where the rich had benefited more than the poor, to more direct targeted assistance, Malaysia had adopted the managed float system from Dec 1, 2014, to determine the price of retail petrol and diesel.
“Our managed float system uses the average price of the refined product — not crude oil — for the previous month to determine the retail pump price for the next month. Specifically, Malaysia uses the Singapore Means of Platts (MOPS) pricing for petrol and diesel.
“While global oil prices had increased in recent months due to an agreement to cut production by oil-producing countries — which also benefits Malaysia — the price of refined oil products has increased further due to other reasons.”
It said a check on the MOPS would show that the average price of motor gasoline 95 unleaded for January had stabilised in a range of US$69 to US$70 per barrel and was materially higher than the average price in December 2016 where the price had steadily increased from US$62 at the beginning of the month to US$68 by December’s end.
The statement noted that oil refineries in Southeast Asia had enjoyed “higher pricing and margins due to an unusually higher than normal number of refineries around the world shutting down due to fires and major maintenance”.
This, it said, had reduced supply and increased the refineries’ margins and pricing — hence the higher motor gasoline 95 prices.
The statement advised Wan Azizah and Pua to “better understand the economics and market reality of petrol prices instead of making baseless statements that are untrue — or worse — designed to intentionally mislead and incite Malaysians.
“It is like a monthly game that never ends and a game that opposition leaders do not seem to tire of playing.”
The statement said that while Malaysians had reason to complain that the price of RON95 in February at RM2.30 per litre was higher than what they had enjoyed in the past, Malaysia’s petrol prices were still consistently the cheapest in Southeast Asia (except Brunei) and among the 15 cheapest among 180 countries in the world.
“This is unusual as Malaysia is not a big producer and exporter of oil when compared with the other countries in the top 15 cheapest retail petrol list.
“In Asean, our RM2.30 per litre price for February compares favourably to Indonesia (RM2.73), Thailand (RM4.10), the Philippines (RM3.72) and Singapore (RM6.56).
“Malaysia’s RON95 price was also at RM2.30 per litre in October and November 2014. It is also interesting to note that in 2008, RON92 had reached RM2.62 per litre.”
The statement noted that while a managed float would mean that Malaysians had to bear with higher petrol prices when global prices increased, this also meant “we had also benefited from a prolonged period of low refined petrol prices over the past two years when it had reached as low as RM1.60 per litre”.
This, it added, was unlike before 2004 when Malaysians did not benefit from low global oil prices, which had ranged from US$10 to US$20 per barrel compared with US$55 to US$60 per barrel now as Malaysians were taxed 58.62 sen per litre for petrol and 19.64 sen per litre for diesel for decades. These taxes, it noted, were abolished only in the year 2004.
Source : @ FMT Online