LAST_UPDATESun, 22 Jul 2018 10am

Malaysia’s Fuel Issues: What’s The Reality?

File picFile picReality bites, and it sure bites harder when it involves fuel prices, causing a hue and cry amongst Malaysians off late as the government announced that it will end decades-old petrol and diesel subsidies beginning December 1.

However, in a new light, the government claimed that prices of petrol and diesel would be fixed according to a managed float system that will follow the development in the market prices of product cost for each time, and currency exchange rate to determine the retail prices of fuel for the consecutive months. This move was to ensure Malaysian citizens enjoy the most from the softening oil prices in the world.

That brought a slight joy and sigh of relief to Malaysians, in parallel to the decline of world crude oil prices at $ 70 (RM245.60) per barrel, RON 95 petrol dropped four cents to RM2.26 a litre, RON 97 petrol dropped nine cents to RM2.46 a litre, while the price of diesel rose slightly to three cents at RM2.23 a litre.

Pic: Ministry of FinancePic: Ministry of Finance

Even though Prime Minister Datuk Seri Najib Razak is looking to narrow the country's fiscal deficit to 3.5% of gross domestic product this year and balance the books by 2020, his popularity in the polls have dropped and the move made by the government has sparked many questions amongst Malaysians.

Are these debates about fuel prices unrealistic? And has this move transitioned the nation’s spending, resulting to a change in their choice of fuel?

Why Is RON97 The Sudden Preferred Choice?

The demand of the RON97 fuel surged following the implementation of the managed float system that resulted to a slight difference of 20 cents compared to RON95. The supplies of RON97 were reported to be running low primarily in the Klang Valley and the east coast in the last week, the first time it happened in the country.

Syahir Azmi, consumer, told Malaysian Digest that RON97 is his preferred choice of fuel and feels happy that the government have adopted the managed float system that has led to the reduction in the price of fuel.

“With the current drop in world oil prices, I prefer the RON97 because of its higher quality and more so now that it is only 20 cents in price difference compared to RON95. But then again, I would probably revert to RON95 should fuel prices increase in the future,” he said.

The Malaysian Digest team also investigated and found that up until yesterday in the Klang Valley, fuel stations are experiencing shortage of RON97 due to the increase in demand. College student Tan Si Si claimed that he was shocked by the shortage of RON97 as this was the first time such situation has occurred.RON97: Out of serviceRON97: Out of service

“I went to refuel RON97 in a petrol station in Kampung Baru, and to my surprise, the RON97 fuel had run out of stock. I’ve never experienced this,” he explained.

Domestic Trade, Co-operatives and Consumerism (KPDNKK) Minister Datuk Hasan Malek also addressed the shortage of RON97, and revealed that measures have been taken to resolve the issue.

“Petrol dealers should ensure that they order more stock of RON97, but of course supply for any additional order will take time,” he said.

Fuel Hoarding- True Or False?

The rising issue that the higher-priced RON97 has run out of stock also led to inquisitions as to whether the government has been hoarding fuel. Hasan however denied the allegations stating that, “There are a total of 130 stations out of the 3,600 nationwide that do not have stock of RON97 but it has nothing to do with fuel hoarding,” he assured.

He added that apart from the measures that were taken to restock RON97 in stations nationwide, Malaysia has also brought in fuel supply from Singapore.

“Let us also be reminded that there was a huge price difference between RON95 and RON97 before this, which led consumers into choosing RON95 as their preferred fuel. The previous shipments for RON97 were only at about 12 to 20 percent.

“At present, with the recent issues in shortage of fuel due to the rise in the demand for RON97 over RON95, I’ve been closely monitoring the petrol stations and would like to reaffirm that retailers are certainly not at fault or hoarding fuel to increase their profits. The rumours are definitely false accusations made against them,” he proclaimed.

The Difference In Fuel Quality

In the heat of the fuel issues, other concerns were also raised about the difference in the quality of fuel, affecting the performance of our cars in the long run. While most would shy away from using premium fuel to save a few cents from their pockets, some cannot get rid of the nagging fear that lower quality fuel could bring damage to their car's engine. We seek the opinion of some experts to address these concerns.

In response to the consumers concerns, Mohd Kamarul Azlan, an experienced mechanic in Semenyih, Selangor tells us that the variances between using RON97 or RON95 will not greatly affect the car’s engine. So, you can stop worrying if you are switching up fuel for your car.

Mohd Kamarul AzlanMohd Kamarul Azlan“In my 22-years of experience of handling various car engines, these assumptions are completely untrue because with the advances in engine technology, a car's onboard computer is able to adjust according to the variations in fuel, so most drivers won't notice a drop off in performance between different types of fuel whether RON97 or RON95.

“However, the RON97 will be much better for the engine to function smoothly in comparison to the RON95. A key difference would be more additives in the type of fuel. A higher-priced fuel will most-likely contain some secret components. This extra shot of additives will provide an additional level of cleaning and protection for the engine,” he shared with us.

If that does not put your mind at peace, we further clarified about the efficiency of the different types of fuel. President of the Petrol Dealers Association of Malaysia (PDAM), Datuk Abu Samah Bachik tells us that the government purchases and distributes crude oil to various retailers in Malaysia such as Petronas, Shell, BHP and Petron. However, beyond that, there is an undeniable difference in the car’s engine performance according to the quality of fuel used and this also depends on the varying additive components by different retailers.

“Bear in mind though, the fuel obtained by all retailers were originally the same, the only difference is that each has its own formula, a mixture of components with better additives that would affect the car’s engine performance. These mixtures however are secret components that are made confidential by the retailers.

“I do believe there are differences in the quality of fuel used. Consumers will be able to feel it and measure it in their car's engine performance,” he explained.

Ways To Overcome Fuel Issues?

As long as the nation continues to possess automotives, fuel prices will remain an endless issue. Dr Juhana Jaafar from the Faculty of Petroleum & Renewable Energy Engineering, Universiti Teknologi Malaysia (UTM) believes it’s time the government considered steps moving forward to overcome fuel issues faced by the country.Dr. Juhana Jaafar Dr. Juhana Jaafar

“The distribution of fuel may vary amongst the retailers. To avoid any shortages in fuel supplies in the future, and especially now with the slight difference in the price of RON97 compared to RON95, I suggest the government switch to using only a single type of high-quality fuel so there would be no classification and variants in fuel.

“If this method brings doubt to some consumers who cannot afford to pay a higher amount, perhaps the government could review the payment method of fuel based on the income of the consumers,” she added.

The price of fuel and its production is influenced by the actions of people and their consumption decisions. With this being said, Juhana also encouraged consumers to act wisely by reviewing the prices of fuel purchased based on their monthly consumption. 

As a call to the government for future fuel pricing in the country, this December 31, approximately 10,000 people are expected to join a protest calling for a reduction of RON95 to RM1.90 per litre. The demonstration at Dataran Merdeka will be led by 16 non-governmental organisations and Pakatan Rakyat parties who believe that the government's move in ending its fuel subsidies is a burden to the nation.