Petrol and diesel prices are expected to continue to rise over the next two to three months, based on the current economic climate. This was predicted by an expert on the matter, Datuk Chua Tia Guan, to Chinese daily Sin Chew Jit Poh.
According to Chua, the two main factors in play are the price of the raw crude oil and the ringgit’s performance against the US dollar.
“The government fixes the retail price for petrol and diesel with a managed float system based on the average monthly price of crude oil, and raw crude is priced in US dollars. Therefore I advise consumers to be prepared to face an even more challenging period over the next two or three months,” he added, adding that he hopes the government will consider the extra burden the rakyat will have to shoulder with rising fuel prices.
“Our country is an oil producing nation. The government should use the receipts from oil exports to provide infrastructure such as schools and roads for the rakyat. With the cost of goods rising, the government should provide subsidies or financial help to reduce the burden of the people, especially the low income group,” said Chua, who is the head of tax and financial consulting at the Great Vision Advisory Group.
The report, carried by Sinar Harian in its Dari Media Cina column, added that lorry transportation fees are set to increase soon following the rise in diesel prices. According to the lorry owners association, it is forced to raise rates as diesel makes up 20% of total operation costs.
Diesel prices went up by 10 sen to RM2.15 per litre on Feb 1. Euro 5 diesel prices went up by the same amount to RM2.25, while RON 95 petrol increased 20 sen to RM2.30. RON 97 is now RM2.60 per litre, up 20 sen. The unregulated Petron RON 100 now goes for RM3.05 per litre, up 10 sen.
Following accusations that fuel prices were increased without basis, Barisan Nasional’s strategic communications team recently release a statement explaining that the currently employed managed float system (introduced in December 2014) uses the average price of the refined product, specifically the Singapore Means of Platts (MOPS) pricing for petrol and diesel, which is public info.
“It was widely reported over the past several months that oil refineries in South-East Asia had enjoyed higher pricing and margins due to an unusually higher than normal number of refineries around the world shutting down from fires and for major maintenance work. This had reduced supply and increased the refineries’ margins and pricing, hence the higher MOGAS 95 prices,” it explained.
The comms team for the ruling coalition added that Malaysia is among the countries to still have consistently low petrol prices relative to other South-East Asian countries, and even globally.
“This is unusual as Malaysia is not a big producer and exporter of oil when compared to 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),” it said, adding that Malaysians had also enjoyed prolonged periods of low petrol prices over the last two years.