From The Star – Fuel Pricing by Car Size

January 19, 2010

Do I need to elaborate on this article from The Star deadline 2010-01-08? It should be retitled ‘Fuel Pricing Finally Goes Bananas’:

PETALING JAYA: The bigger your car, the more you will have to pay for petrol from May 1.
This is because the Government is going to change the way fuel is subsidised.
It is planning for a fuel pricing mechanism that will ensure only targeted groups, particularly those from the lower-income, will receive fuel subsidy.
Also, foreigners who drive into the country to fill up their tanks will not be eligible for subsidy and will have to pay more for fuel.
“The bigger the engine, the higher petrol will cost,” Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said yesterday.

Don’t get me wrong, I’m all eliminating the fuel subsidy in conjunction with a concerted effort to entice me to use a safe, reliable, efficient, cost effective, redundent public transport system. My dark sense of humor was so tickled by the above article that it shut down for a few minutes for want to address all the things that can go screwy.

If you want some follow up articles, try here, here.

From the Star – Govt may be pressured to review prices of petrol

November 7, 2009

From the Star, dateline 2009-10-23:

Crude oil prices up 15% since start of October

PETALING JAYA: Rising crude oil prices in the international market may up the pressure on the Government to review local pump prices to rein in the country’s huge fuel subsidy bill.

Crude oil yesterday retreated from a high of US$82 per barrel hit in New York overnight, but remained above the US$80 mark during Asian trading hours yesterday.

At the current level, crude oil had surged 15% since the start of October and more than doubled from a low of US$34 per barrel in March.

And just in time for the next general elections.


Crude oil trending - taken from the Star

From the Star – How will you benefit from the new RON95 petrol?

September 23, 2009

Taken from the Star, dateline 2009-03:

PETALING JAYA: RON95 was the buzz at neighbourhood petrol stations as consumers had to quickly grasp the differences between the RON92 (which is discontinued) and RON97 (which has been upgraded) and the new, more environment friendly oil.

The first thing they want to know is how they will benefit from this change to RON95 which retails at RM1.80 per litre.

“About 90% of motorists using RON97 (which has been upgraded to a premium product and sold at a higher price of RM2.05 per lire) can now switch to RON95,” said Domestic Trade, Cooperative and Consumer Affairs Ministry secretary-general Datuk Zain Mohd Dom.

“The price of RM1.80 for RON95 will be capped at this level for the rest of the year,’’ Zain told StarBiz, referring to a statement earlier by Minister Datuk Seri Ismail Sabri Yaakob. “It moves within an active price range, depending on the price trend of oil gauged over a one-month period.”

Malaysia - Petrol Price

Malaysia - Petrol Price

From The Star – RON97 petrol to cost more in July

February 21, 2009

Date line 2009-02-20:



PUTRAJAYA: The price of RON97 petrol will be increased, when the Government introduces RON95 to replace RON92 in July, said Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad.

He said this was to encourage consumers to use RON95, which was cheaper compared to RON97.

“The Government intends to subsidise more on RON95, when it is introduced in July to make it the same price as RON92,” he told a press conference here on Friday.

He said the price of both RON95 and RON97 petrol would be announced in July.

 Don’t know about you, but I would have kept RON95 at the current price, and got RON97 users to pay a premium. If most cars can use RON95, then from the user’s end nothing has been changed, but the government can reduce its fuel subsidies.

From the crude oil price perspective, this will cause … no change at all.

How Diesel and Petrol Price Set in Malaysia

February 19, 2009

An interesting topic. So interesting that I’m going refer to the sources here and here, but quote verbatim as well.

BTW, the price of gasoline in the US (2009-02-16), according to my calculation method, is Rm1.85/liter.

Domestic Trade and Consumer Affairs Ministry Domestic Trade Division Senior Director Ismail Ahmad has revealed to all how the price of petrol and diesel at the pump is calculated in Malaysia.

The formula used to calculate the price of fuel is called the Automatic Pricing Mechanism (in place since 1983) and its function is to stabilize the price of petrol and diesel in the country to a certain extent, via a variable amount sales tax and subsidy, so the retail price only has to be changed if the difference in price exceeds the threshold of the tax and subsidy, at the discretion of the government.

In the table on the left, you can see that the Cost Of Product is not derived from the price of Crude Oil on the NYMEX, but it is based on the Mean of Platts Singapore (MOPS). The cost is the already refined product, which means the refinery cost are already included and indexed in the MOPS.

You may ask what exactly is the MOPS? Many countries in this region base their fuel prices on the MOPS, including alot of ASEAN countries and even Australia. The index is tracked, assessed and updated by Platts, a McGraw-Hill company in Singapore and is based on the daily average of all trading transactions between buyer and seller of petroleum-based products.

A buyer of a finished (refined) oil product will refer to the MOPS index as a better indicator/benchmark of world prices rather than crude oil prices. The MOPS price typically has a premium over the crude oil prices. This is why the Malaysian government uses MOPS to determine fuel prices rather than NYMEX crude oil prices. Unfortunately it is hard to track MOPS prices as individuals because the data is only available to those who purchase it, unlike the publicly available charts from the NYMEX.

Next up is “Alpha”, which is fixed at 5 sen per liter for petrol and 4 sen per liter for diesel. This is sort of a buffer for the oil companies. If the price of the product that the oil companies buy is higher than the MOPS published price, and the difference is higher than Alpha, the oil company will bear the extra cost, and vice versa.

Operational costs should be self explanatory. They are set at 9.54 sen per liter, 8.98 sen per liter and 8.13 sen per liter for the Peninsular, Sabah and Sarawak respectively. Operational costs cover transport and marketing costs. Then comes where the oil companies make money, which is set at 5 sen per liter for petrol and 2.25 sen per liter for diesel. The stations make more money
per liter of petrol – 12.19 sen per liter for petrol and 7 sen per liter for diesel.

Sales tax and subsidies are combined. According to the Sales Tax Act 1972 (this is not something new!), the government CAN collect a maximum sales tax of 58.62 sen per liter for petrol and 19.64 sen per liter for diesel. This comes into effect when the real price of petrol and diesel at the pumps are lower than the fixed retail price. The government can pocket this, or it can revise the fixed fuel price to be lower to remove the difference in price so the savings go into the rakyat’s pocket.

On the other hand, if the fixed retail price is lower than the actual cost of the petrol and diesel at the pumps, the government can pay a subsidy of the same range. Right now the government says it will give a maximum subsidy of 30 sen per liter instead of the maximum allowable subsidy of 58.62 sen per liter, IF NEEDED. This 30 sen maximum subsidy is as part of an improved Automatic Pricing Mechanism, which the Ismail Ahmad says is designed to stabilize fuel retail prices and allow industry players to manage expenditure in a more orderly manner.

So, if you are trying to figure out how crude oil price and pump prices are related, they are disconnected by the use of MOPS.

From the NST: Unlikely Petrol Price Change

February 17, 2009

To increase my readership, I’ve decided to take some words from the New Straits Times, dateline 2008-02-14:

Petrol and diesel prices are not likely to change as there is no significant change in world crude oil prices.

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad said the ex-refinery prices of fuel remain high although the price of crude oil had gone down.

“As such, if we use the crude oil price as the indicator to lower fuel prices, this mean we would be giving out more subsidy,” Shahrir said at the Natural Gas Vehicle (NGV) Carnival organised by the Johor NGV Users Association here today. “We have already subsidised 30 sen a litre. If we are to lower fuel prices again, we will have to spend more for subsidy. Previously, there was no problem to base the pump prices of fuel on crude oil price. This is because the crude oil price is moving in tandem with the ex-refinery prices. Now, it is no longer the case.”

You can subscribe to an online version of the paper at the Bluehyppo site, follow links to e-browse.

BTW, what do you do at the NGV Carnival? Rides on NGV fairground attractions? Win a NGV conversion unit during the raffles? Eat NGV themed delicacies? Or does it look like any other (add generic name here) carnival?

Reminder – RON 92

February 10, 2009

In anticipation of RON 95 being sold at the same price as RON 92, during my travels I did discover that RON 92 is being sold in the less metropolitan parts of the country at RM1.70/liter.



Here are a few synths of the resort (here, here and here) I stayed which was near the RON 92 station. Visit Photosynth for more fun.

Cheaper RON95 petrol by Mid-Year

January 9, 2009

Taken from the New Straits Times, Malaysia, dateline 2008-01-09

KUALA LUMPUR: RON95 petrol will be introduced by the middle of this year to provide a cheaper fuel option for the masses.
At the same time, a higher tax will be levied on RON97 to subsidise RON95.

This was revealed by Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad. A chart on how the retail price of petrol is determined will be provided to the public next week.

The chart will help answer queries and explain how the pricing mechanism works.

RON95, although of a higher grade than RON92, will be priced at the same level as RON92.
Shahrir explained that RON95 was a basic grade of petrol which could be used by virtually all vehicles with the exception of some luxury cars.

“We will introduce RON95 by June or July. RON95 is about 10 sen to 11 sen cheaper than RON97. RON92 is currently priced at RM1.70. We will price RON95 at about the same,” he said after launching the Tesco-RHB Credit Card and Tesco-RHB Debit cards in Tesco Ampang yesterday.

Shahrir said the pricing of RON95 would be based on the Automatic Pricing Mechanism (APM). Prior to this, there was no price crisis and there was no need to explain on how the mechanism worked, he said.

The pricing of petrol at kiosks is based on the Mean of Platts Singapore (MOPS), a regional fuel price monitor.

“Should the MOPS price go below US$40 (RM142) a barrel then retail fuel price will fall. If MOPS is above US$78 per barrel, retail fuel price will increase,” he said.

Petrol Prices Drop in Malaysia – Not!

January 4, 2009

For those of you expecting a price drop every 2 weeks, this week bucks the trend. Petrol in Malaysia is still RM1.80 per liter.

Linking to my other article on comparative pricing, the US gas price on 2nd Jan 2009 is RM1.481 per liter (USD1.624 per gallon).

Petrol Prices Drop in Malaysia

December 18, 2008

Quoting from the New Straits Times on the 15th Dec, 2008

The price of fuel is reduced further by 10 sen a litre from midnight tonight. The price of RON97 is now RM1.80 from RM1.90 and RON92 at RM1.70 (from RM1.70) and diesel at RM1.70 (from RM1.80).

 Linking to my other article on comparative pricing, the US gas price on 15th Dec is RM1.569 per liter (USD1.667 per gallon).