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LAST_UPDATEFri, 27 Oct 2017 9am

How Much Lower Do Malaysians Want Petrol Price To Be Before They Are Happy?

This week Malaysians were greeted with news of petrol pump prices finally going down 3 sen after seeing consecutive weeks of upward trend.

The most common complaint when prices keep inching upwards is that our country produces oil so it is our right to enjoy cheap petrol.

Is this really the case?

Political analyst Lim Sian See (LSS) sought to give Malaysians the big picture into how much or too little that we fork out for petrol.

In a recent posting on LSS Report  LSS highlights four key points that Malaysians need to understand about our petrol prices.

Firstly, is that due to long term government subsidies, our petrol price is far behind the current inflation rate.

"And even if you use the price 27 years ago in 1990 of RM1.10 per liter, the price today when you calculate to include inflation would be RM2.30. Again this is higher than today's price of RM2.19," LSS outined.

Turning the issue around, LSS said that although Malaysians perceived that subsidies had kept our petrol price low, if you compare global crude oil prices, which have hiked from US$25 to US$60 per barrel while the exchange rate went from US$1 to RM2.40 until US$1 = RM4.20 today.

"This difference is explained when you realize that, instead of subsidizing petrol Mahathir's govt had taxed petrol at 58sen per liter for decades until this tax was abolished in 2004," LSS pointed out.

The Domestic Trade, Co-operatives and Consumerism Ministry (KPDNKK) provided this helpful chart to explain why petrol pump prices do not follow crude oil price fluctuations by illustrating how cost is incurred at each stage of the production cycle before the petrol we use arrives at the station pump.The Domestic Trade, Co-operatives and Consumerism Ministry (KPDNKK) provided this helpful chart to explain why petrol pump prices do not follow crude oil price fluctuations by illustrating how cost is incurred at each stage of the production cycle before the petrol we use arrives at the station pump.

LSS went on to reiterated the fact often highlighted by our government that our current petrol pump prices is among the cheapest already.

If we look at global prices, which average to around RM4.57 that is more than double our current price range.

Combine that with the fact that Malaysia has the cheapest petrol in ASEAN despite Brunei producing much more oil than us and is ranked 15th or 16th cheapest among 180 countries.

:Pic: Globalpetrolprices.com:Pic: Globalpetrolprices.com

"But look at the rankings above, which country do you want Malaysia's petrol price to be cheaper than before you will be happy?" LSS added.

Finally, LSS raised the often missed point that Malaysia's petrol consumption has exceeded its output so we are now a net importer of crude oil, a situation attributed to the fact that Malaysia have one of the highest car ownership rates in the world as illustrated in the accompanying chart.

 Pic: LSS ReportPic: LSS Report

"You can see for yourself how the blue bars (our oil production) has dropped while the yellow bars (our oil consumption) keep increasing year after year.

"And when the yellow bar is now higher than the blue bar means that Malaysia is now a net importer of crude oil," LSS emphasized.

Given the current situation, LSS concluded that, "In fact, Malaysia really has no right to be among the top 15th cheapest petrol in the world".

- mD