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03 March 2015

Price of Petrol March 2015

The price of RON95 is now RM1.95 and RON97 is now RM2.25. This price is cheaper than prices in October 2014, when the present pricing mechanism was imposed. The nice table you see above is from the Facebook page of Sinchew Daily newspaper. (Thanks, guys! I couldn't have done it better myself....)

It's a frequent complaint of Malaysians whenever the price of petrol goes up. "What! Oil now up to $xxxx (insert figure here) per barrel! Soon our petrol will go up again. Soon everything will go up again...." And it is an accepted fact of life -- petrol prices will go up every so often, causing everything to go up. Coffee, food, clothes, services, etc. Everything goes up with the petrol.

However, due to the current petrol war between Saudi and USA, excess oil production has driven oil prices down. Some articles say that it's to drive the USA out of the oil business. Reason? Saudi has lower breakeven point for each barrel produced (after the initial cost of drilling the oil well), compared to USA producers. Oil wells drilled in the Middle East have a longer production period (about 20 years) compared to "fracking" method used in the USA (1-2 years). Once the USA is out of the oil business, oil production will be back to normal -- controlled numbers, and priced comfortably high.

In the meantime, local producers have no reason to raise their prices, not with the price of petrol at these levels. However, a good number of them still do, due to "the GST Effect". These are the producers and traders who make a big show of it. "Oh, the GST is coming!" they cry. "Everything will go up!" But in fact, on paper, it shouldn't go up at all. After all, many of them are already paying tax, and GST merely replaces these taxes. I sincerely hope that prices won't go up, even after GST is implemented.

In the meantime, it's still a good time to fill your car up and take a slow drive along Peninsular Malaysia's East Coast. Have a nice view of the sea and relax.


SeaMaster said...

With the introduction of GST and the government scrapping the Sales Tax, shouldn't our pretrol/diesl price be coming down significantly? This is especially true when the government announced no GST for diesel and Ron 95, but only on Ron 97. Diesel sales tax was 19.64 cent a liter while both Ron 97 and Ron 95 had a 58.62 cent per liter sales tax. Prior to April, the Ron 97/95 and Diesel were R2.25, 1.95 and 1.95 respectively. If you remove the sales tax, their pre-tax price should be R1.6638 for Ron 97, R1.3638 for Ron 95 and R1.7536 for diesel. With only GST applicable to Ron 97, the April pump price should be RM1.7636 for Ron 97, RM1.3638 for Ron 95 and RM1.7536 for diesel. Pls correct me if I am wrong.