11 January 2015

Should petrol pumps hang from the ceiling?

While I was browsing my Google Plus timeline, I came across this.

Apparently in Japan and Korea, petrol pumps hang from the ceiling. This solves the issue of parking your car just right so that the pump is located next to where you pump the petrol i.e. the fuel filler cap or petrol cap.

I once read from a book, car manufacturers make cars with their petrol caps on left and on the right so as to make sure that petrol stations won't have people queueing up for petrol pumps of a certain sort only. For example if all cars had their petrol caps on the left, drivers would want to park on the right of the fuel pump so as to fill up their car fuel tanks. Lefts and rights are all right as a solution when petrol pumps are located at chest level -- you need to pull them over to the petrol cap, and the closer the petrol cap is to the pump, the better.

However, if petrol pumps hang from the ceiling, the issue of which side is the "right side" would not even come up. Here are some pictures of pumps that hang from the ceiling, thanks to Google Images.








It does look like a good idea, we can consider adopting it to reduce some of the following problems:
  • mess at individual pump stations;
  • accidents caused by people ramming into petrol pumps accidentally;
  • pump cables being pulled too far when the petrol cap is on the wrong side; and
  • inconvenience of reparking when the petrol cap is on the wrong side.
Of course, I am aware that petrol pumps in Malaysia have mechanism for credit card payment, and the pumps in the photos don't seem to have that. Maybe we should study how they solve that problem in Japan.

07 December 2014

A visualization .... World's Biggest Oil Producing Countries Today

I found this visualization of the World's Biggest Oil Producing Countries over at Visualizing.org. Source

I thought that I'd share it on this blog. I realised that the original image was too big and wound up being downgraded after uploading. So I broke it up into several images and uploaded it. Anyway, here it is:

Overall summary of countries

Saudi Arabia and Russia

United States and Iran

China and Canada

Iraq and United Arab Emirates

Mexico and Kuwait

Brazil and Nigeria

Venezuela and Norway

Finally, Algeria.

02 December 2014

Malaysian Ringgit Affected by Falling Oil Prices

Dear Reader

Malaysia's stock exchange and ringgit currency recently took a beating due to falling oil prices.

According to the Star:
The plunge follows an Opec decision not to cut production despite a huge oversupply in global markets. ... it [price per barrel] could plunge all the way to US$32.40 per barrel.

Oil prices fell to their lowest in five years yesterday due to the production war between Opec and the American oil boom from shale oil producers.

In recent months, the United States has become a major producer of shale oil and gas – fuel that’s extracted from rock fragments – threatening the position of Saudi Arabia as the dominant oil-producing country.

In response to the threat, Opec, which is influenced by Saudi Arabia, has vowed to continue production of oil in a market where supply has outstripped demand.

This has led to a free fall in global oil prices that have declined by more than 40% since July this year.Source

Malaysia is a net exporter of oil, and oil is currently below USD70 per barrel. According to Channel News Asia:
Mr Divya Devesh, FX strategist in FICC Research at Standard Chartered Bank, said: "Malaysia happens to be a net oil exporter, so lower oil prices impact Malaysia trade and fiscal balance negatively. So as a result of that, we have seen a sharp move higher in (US) dollar-ringgit.

"Also what we have seen is some degree of correction in Malaysia equities, particularly the oil and gas sector that has been badly hit because of the slide in oil prices, and we are seeing some of that equity weakness seep into currency as well."

Down in Singapore, money changers are snapping up the Ringgit. Source The article quoted a Malaysian, Chew, who planned to remit more money home, and a Singaporean, Rosnah, who planned to stock up on Ringgit as she goes quite often to Johor Bahru (JB) for her shopping, etc.

The most interesting part of the article? Here it is:

Analysts have said that Malaysia, whose oil-related industries account for a third of the country’s revenue, is likely to be the Asian country which will be hit hardest by the sudden steep decline in oil prices.

24 November 2014

Removing Subsidies

Dear Reader

It's been more than 5 years since Mr. Paul Tan wrote his article "How Fuel Prices Are Calculated in Malaysia". Other blogs have also covered this issue. To recap, the oil automatic pricing mechanism (applied in Malaysia since 1983) was based on the following:
  1. Cost of Product - Based on Mean of Platts Singapore (MOPS)
  2. Alpha
    • petrol - 5 sen / liter
    • diesel - 4 sen / liter
  3. Operational Cost
    • Peninsular Malaysia - 9.54 sen / liter
    • Sabah - 8.98 sen / liter
    • Sarawak - 8.13 sen / liter
  4. Oil Company Margin
    • petrol - 5 sen / liter
    • diesel - 2.25 sen / liter
  5. Petrol Dealer Margin
    • petrol - 12.19 sen / liter
    • diesel - 7 sen / liter
  6. Sales Tax / Fuel Subsidy
    • petrol - 58.62 sen / liter
    • diesel - 19.64 sen / liter
    • subsidy if price higher than retail price
    • tax if price lower than retail price
As we can see, the subsidies are quite substantial compared with the alpha, the margins and the operational costs. PerakToday noted that MOPS is based on refined oil rather than crude oil; this causes MOPS to be higher than NYMEX.

Philippines and Indonesia have similar oil pricing mechanisms.

Removing fuel subsidies will help the economy, by freeing up resources that can be used for other purposes. Here are some slides from a presentation about "Fiscal policy related to fuel subsidy and climate change program in Indonesia."

Source: OECD

The move to partly eliminate fuel subsidies has been implemented recently in neighbouring Indonesia. Economists have known that fuel subsidies are wasteful, but politicians who do away with fuel subsidies will face the wrath of voters.

From the Economist, 22 November 2014:
Indonesia’s fuel subsidies are wasteful, expensive and poorly targeted—benefits overwhelmingly accrue to the country’s middle and upper classes, rather than the car-less poor. Between 2009 and 2013 Indonesia spent more on fuel subsidies (over 714 trillion rupiah) than it did on infrastructure and social-welfare programmes combined. Subsidies threatened to eat up more than 10% of total government spending next year, imperilling the country’s ability to pay for the ambitious and necessary health-care, education and infrastructure programmes that Jokowi promised in his election campaign. The price rise, modest though it may be, is forecast to save the government roughly 120 trillion rupiah next year.

From Fortune, 18 November 2014:
The move, which fulfils a key pledge of Widodo’s election, will raise domestic gasoline prices by around 31%, and diesel prices by 36%. ... it will handily reduce both the government’s budget deficit and, by reducing demand for imported fuel, the current account deficit, which have been the country’s two biggest macroeconomic weaknesses in recent years.

Widodo is following the lead set by Indian Prime Minister Narendra Modi in taking advantage of the sharp drop in global oil prices to eliminate subsidies that have swallowed up vast amounts of public money in recent years.

One funny thing is that in Indonesian websites the discussions about fuel subsidy frequently discuss "BBM". It stands for "Bahan Bakar Minyak". (Source)

Here are some pages from a brochure from Jabatan Penerangan Malaysia, on rationalization of fuel prices.


I hope that the subsidies recouped will be used to benefit all communities in Malaysia, irrespective of race, religion and region.

21 November 2014

RON95 and Diesel Prices To Be Based on Managed Float

Dear Reader

The retail price of RON95 and diesel will be based on a managed float from now on. Here is the press statement for the announcement, which I received from a friend:


Dimaklumkan bahawa Kerajaan melalui Mesyuarat Jemaah Menteri hari ini telah memutuskan bermula dari 1 Disember 2014, penetapan harga runcit bagi petrol RON95 dan diesel adalah mengikut kaedah pengapungan terkawal (managed float). Kaedah ini adalah sebagaimana pelaksanaan penetapan harga runcit RON97 sedia ada sejak Julai 2010.

Harga runcit produk petroleum di Malaysia ditentukan melalui kaedah Automatic Price Mechanism (APM) sejak tahun 1983. Melalui APM, Kerajaan akan menetapkan harga runcit pada satu paras tertentu dimana perubahan kos produk tidak akan mengubah harga runcit. Walau bagaimanapun, melalui pengapungan terkawal (managed float) ini, purata perubahan kos produk akan menentukan penetapan harga bagi bulan berikutnya. Ini bermakna jika harga pasaran minyak mentah dunia meningkat, harga runcit RON95 dan diesel juga akan meningkat. Begitu juga sebaliknya.

Sebagai contoh daripada 1 hingga 19 November 2014, purata harga RON95 di bawah APM menurun kepada RM2.27 seliter yang mana lebih rendah daripada harga runcit RM2.30 seliter. Dalam hal ini, Kerajaan akan memantau harga pasaran pada 20 hingga 31 November 2014 dan jumlah sebenar akan menentukan purata harga runcit pada bulan Disember. Jika trend ini berlarutan, adalah dijangkakan harga runcit RON95 bagi bulan Disember akan dikurangkan sewajarnya berdasarkan formula APM.

Pada masa ini harga runcit RON95 di stesen minyak adalah pada harga RM2.30 seliter dan diesel pada harga RM2.20 seliter. Mulai pada 1 Disember 2014, penetapan harga di stesen minyak akan bergantung kepada kaedah yang disebut di atas. Kerajaan akan mengikuti perkembangan pasaran harga produk kos setiap masa dan kadar pertukaran matawang untuk menetapkan harga runcit petrol dan diesel.

Keputusan pengapungan terkawal harga petrol RON95 dan diesel dibuat berikutan kejayaan pelaksanaan pengapungan terkawal harga petrol RON97. Langkah ini membuktikan hasrat Kerajaan untuk memastikan rakyat menikmati manfaat sepenuhnya berikutan penurunan harga minyak mentah dunia.
Kajian bagi pelaksanaan pengapungan terkawal harga petrol RON95 dan diesel ini telah dilaksanakan oleh Kerajaan sebelum memutuskan pelaksanaan kaedah ini.

21 NOVEMBER 2014
 According to The Star's report dated 21.11.2014,

  • All subsidies for RON95 and diesel would be stopped starting December 1, 2014;
  • The retail prices would follow a managed float, similar to the mechanism for RON97 in the country; and
  • The price of RON95 and diesel for any single month would be calculated based on the monthly average price of the preceding month.

According to The Malaysian Insider on 18.11.2014, the price of RON97 went down 20 sen, to RM2.55 per liter. This is because of the effect of the managed float, which fixes the price of RON97 according to the market price of petrol.

Thus, if the managed float is implemented, the price of RON97 and diesel will go down in the near future.