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09 November 2008

Report: 1st Fortnight November 2008

Dear Reader,

Thank you for dropping by PetrolMalaysia.com. You will notice that a new gadget has been added to the middle column, displaying the latest price of petrol. I was inspired by Jeff Ooi who placed a slightly bigger widget (but from the same source) on his website.

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Malaysians heaved a sigh of relief on November 1st, 2008, when petrol prices were reduced by 15 sen. This was in response to the price of petrol, which dropped to USD$62 per barrel. (Source: Malaysiakini, Gov't cuts petrol, diesel prices by 15 another sen, 1st Nov 2008) Several things must be discussed in this article.

The latest prices of petrol effective November 1st, 2008, are as follows:
  1. RON 97 petrol is RM2.15 per litre;
  2. RON 92 petrol is RM2.01 per litre; and
  3. Diesel is RM2.05 per litre.
(Source: Bernama, Another Fuel Price Cut Soon, Says Shahrir, 9th Nov 2008)

Light aircraft fuel goes up
In the Bernama article referred to above, it was stated that fuel for light aircraft has risen from RM6.20 per litre, to RM9.53 (Kuala Lumpur) and RM9.80 (Langkawi) because of fuel shortage. In Singapore, the price of light aircraft fuel is RM6.00 (S$2.61) per litre. Domestic Trade and Consumer Affairs Minister, Datuk Shahrir Abdul Samad indicated that the government might consider letting a company other than Petronas purchase such fuel.

Oil price to be reviewed fortnightly
In the Malaysiakini article referred to above, Datuk Shahrir Abdul Samad was quoted saying that the price of petrol would be reviewed every two weeks. Accordingly, the next price revision will be on 15th Nov 2008. The Star quoted Datuk Shahrir Abdul Samad as saying, "If the price is changed once a week, it will be too short a time for any effects to be felt." (Source: The Star Online, Govt expected to reduce petrol price by 15 sen a litre Saturday, 31st Oct 2008)

Who determines the price of petrol?
On this question, the proper answer seems to be the Finance Ministry. In The Star Online article referred to above, it was quoted that:
Petrol Dealers Association of Malaysia (PDAM) president Abdul Wahid Bidin said they expected the new prices to take effect early tomorrow although they have not received a directive from the Finance Ministry.
Therefore it is clear that the Petrol Dealers Association of Malaysia set their prices according to the directives of the Finance Ministry.

Factors in setting the price of petrol
In the Malaysiakini article referred to above, Datuk Shahrir Abdul Samad mentioned that the Government had to consider the price of crude oil at the point it stocked up about a month ago (in October 2008). Crude oil was more expensive in October 2008. To quote the article:
The minister said the government had stocked up crude oil a month ago when the price was still high and the reduction must be based on the price at the purchasing time.

"It takes about a month to process crude oil to petrol and when the government bought them, the price was not US$62 per barrel so we cannot say the price is this so this is how much you have to reduce it," he said.
I have some questions: (1) Why does the Government need to stock up on crude oil? and (2) Why does the one month required to process crude oil to petrol, affect the price of the petrol we buy? Unless the Government were selling the crude oil to us, directly, it should not matter.

Fuel rebate scheme may be scrapped
For those Malaysians who forgot, the Government generously allowed a fuel rebate of RM625 (cars below 2000cc) and RM150 (motorcycles below 250cc) for Malaysians to ease the pinch caused by the petrol price hike in June 2008. They could claim it upon settling their road taxes. (Source: Malaysiakini, Gov't to revamp fuel rebate scheme, 1st Nov 2008)

According to Datuk Shahrir Abdul Samad, "Not many like the rebate system and feel that it should not have been implemented." (Source: ibid.) My response is that I should claim my fuel rebate before they scrap it. But honestly, many of us working individuals are unable to find the time to claim our fuel rebate at the post office. Over time, we tend to forget. And therefore the RM625 does not get claimed. Perhaps, the Government can help by putting up posters at post offices, reminding people to claim their fuel rebate.

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I look forward to the next price revision on 15th Nov 2008.

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