I think it’s about time we slashed the petrol price, don’t you think?
When the price of petrol was increased from RM1.92 to RM2.70 – a hike of 41 per cent – on 5 June, the price of Nymex Light Sweet Crude was around US$125 per barrel (on 4-5 June).
The current oil price is around US$56/barrel, which is less than half of what it was at the time.
And yet, after three four reductions, our petrol price is still RM2.30 2.15 – nowhere near the RM1.92/litre of 5 June, when the price was US$125.
Even if we take the price of RM2.70 at 5 June, a 50 per cent reduction in line with global prices would be RM1.35/litre – certainly not more than RM1.90. It’s time for a sharp drop in pump prices.
But the most we can expect from this government is a 15-sen reduction to RM2.15 2.00/litre, which will not have much impact on overall domestic demand/consumer spending unlike the sharp rise earlier. Neither will it be able to reverse the rise in food prices as a result of the sharp hike earlier.
A sharper drop in petrol prices, on the other hand, would stimulate domestic demand and local economic activity. It will also give traders and transport operators no excuse for maintaining high prices and thus lead to lower food prices.
Of course, such a sharp reduction in oil prices would have implications for our worsening budget deficit. So the question that arises is what happened to the extra revenue the government earned when fuel prices were soaring?
That said, the danger of slashing oil prices is that we might lose sight of the need to improve our public transport, to encourage fuel conservation and to explore alternative energy sources such as solar. Despite any price reductions, we must maintain our resolve to improve in these areas.
In the long run, we still have to move towards a more sustainable domestic-driven economy.
Do something about the … bread!
Wholemeal bread still RM3 per loaf!!
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This UMNO-BN (Barang Naik) government has no ethics or honesty. All they know is how to fleece the rakyat and take away our money to enrich themselves and their cronies. Throw them out I say.
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Yes Andrew agree with you, not only throw them out. We Rakyat will send BN/Umno … to HELL FOREVER!!!
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Hi Anil,
m part of the organising team of the interfaith forum on HIV… hope u can publicise it on ur website as u r the moderator for the forum. Thanks…
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Hi anil,
m part of the organising team for the interfaith religious forum on HIV.. hope u can publicise it on ur website .. u r the moderator on the forum day rite.. thanks..
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Also, where are the “experts,” whose mantra is a free unregulated market? They made so much noise opposing government subsidising petrol price at the pump when the global price went up? Why are they quiet now, hardly making any noise about getting the government to lower the price to reflect the global market?
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With all the political bickering amongst the political parties and
also by the general public, everyone has forgotten about the petrol
issue.
In June, the government, in all its brilliance and
intelligence, increased the price of fuel by 78 sen to RM2.70,
justifying the increase to the increase of world crude oil prices to US$147 a
barrel.
However, now, crude oil has fallen to US$56.53 a barrel. Using my Standard
4 mathematics, if crude was at US$147, and the price of petrol went up
to RM2.70 a litre, now, if crude oil has gone to more than half its
value, should not petrol be more than half of RM2.70?
How can children in school comprehend their mathematics now when the
whole basic economics of calculations by the government has gone
bonkers?
I still remember my Standard 4 mathematics….The following is a
flashback to those who sat for their Sekolah Rendah Peperiksaan
Matematik, especially in Standard 4.
Jawab soalan dengan mengitamkan huruf A, B, C, D.
Sekiranya, Ali beli 1 tong minyak mentah dengan harga US$147 di
bandar, dan menjualnya pada RM2.70 se-liter di kampungnya, berapakah
harga baru se-litre Ali boleh jual di kampungnya sekiranya pemborong
di bandar menjual se-tong minyak pada harga US$62.
A) RM2.70
B) RM1.92
C) RM1.50
D) RM1.10
Malaysians are just too complacent in protesting the unjustified high
prices of petrol. They rather just pay any price determined by the
government. Remember, each day of delay in the reduction of the price
of Petrol, the government reaps millions in profit due to the “false”
high price of petrol the rakyat ia paying.
If a Standard 4 pupil can come up with a correct answer by swiftly
shading the correct answer on the answer sheet, why is the government
finding hard to swiftly decrease the price of petrol in accordance with
world prices? After all, we have brilliant and intelligent economists
in the government who are far more intelligent than a Standard 4
pupil. Otherwise, might as well emply a few Standard 4 children to give the government advice in doing calculations.
The government needs to not only bring down the price of petrol, it
has to undo the damage it caused by increasing the price of petrol
sharply to RM2.70. And what damage is this? The damage I refer to is
the exorbitant price of food that every Malaysian is paying and feeling the
pinch. It needs to indivually go through each and every essential food
item and instruct the distributor or the supermarket to bring down the
price of the item. This goes against the free market economy principle
or better known as the laissez-faire theory, but, it is inevitable for
the govenrment to do so as the ralyat is currently suffering due to
extreme high prices food and their low remuneration. Everyone knows that
our pay packet does not correspond to the cost of living in Malaysia.
The price increase applies to every single item across the
board and everyone is feeling the pinch. Many are even starving and
reducing the food intake of their children. Eventually, Malaysia might
be on of those African nations, where, due to extreme inflationary
pressures, the people of “Priced Out” of living in the country as prices of food
are too exorbitant and the money the earn have very little value.
Today, earning
RM5000 hardly gets a family of 4 by. And 90% of the working population do not
even earn more than RM3000.
The politicians do not feel what the general society is feeling or
going through as with their big fat pay packets, food prices do not
burn a hole in their pockets.
Infact, some politicians don’t even talk
about going to the pasar or going to Giant, Carrefour to shop, they
actually go to Harrods Market Hall and Selfridges Market Hall in
London to buy their groceries.
Ganesh
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so are we now subsiding the government for the petrol??? that’s a nation with petrol export??? our MPs must bring up this issue to the parliment!!! it could be a brutal blow to the BN/UMNO!!! the whole malaysians will despite them more and wanna see the change immediately.
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I recently read a blog by an individual who actually gave calculations as to how much the price of petrol should be. Finally I am able to understand the so called complex calculations of petrol in Malaysia!
http://shamsuliskandar.wordpress.com/2008/11/01/terima-kasih-harga-minyak-turun-rm-015-tetapi-amk-gesa-turunkan-harga-minyak-sinar-harian/
Shockingly, we are actually paying RM1.00 more per litre and this money goes freely to the government.
According to the blogger, one barrel of crude oil can produce of 159 litres of petrol. The price of USD56 per barrel should be calculated with 3.5 being the exchange rate of the US dollar to Ringgit Malaysia. The total should then be divided with 159 litres. Thus, USD56 x 3.5 = RM196 divided 159 litres = RM1.23 per litre.
The government has informed us that we are receiving a subsidy of 30 sen per litre. So, RM1.23 per litre – 30 sen = 93 sen per litre. But Malaysians are paying RM2.00 per litre!! (the new price after the reduction on 17 Nov 2008)
By right, Malaysians should be paying 93 sen per litre and not RM2.00 per litre. The reduction given by the government does not make any sense at all and does not correspond to the reduction in price of crude oil per barrel.
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Betting on the short memory of Malaysians, the government once again try to please Malaysians with further fuel price reduction. If we review the historical data of fuel price from 2000 up to June 5 2008, you will realise that you have been cheated again, current crude oil per barrel is around $56, based on past record we should ask the government to reduce petrol price to RM1.62. That is the price I believe Anwar Ibrahim, once assume the post of PM, will declare.
Year Petrol Crude Oil per barrel
05-06-08 RM2.70 $120
26-02-06 RM1.92 $63
30-07-05 RM1.62 $57
05-05-05 RM1.52 $48
01-10-04 RM1.42 $47
01-05-04 RM1.37 $38
01-03-03 RM1.35 $31
31-10-02 RM1.33 $28
01-05-02 RM1.32 $26
20-10-01 RM1.30 $20
01-10-00 RM1.20 $35
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It’s time the Pakatan Rakyat people do something in Parliament about the pump price of petrol. Big increase of 78 cents and slowly decrease by 10 cents and 15 cents when price of petrol is below USD60 per barrel. If you look at it, the BN government is actually playing masak masak with the Rakyat. After 4 or 5 times price reduction in pump price, have prices of other things that the Rakyat use daily also drop in price? Who is to be blame for this fiasco, our great Prime Minister and greatest economist in the universe.
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“Even if we take the price of RM2.70 at 5 June, a 50 per cent reduction in line with global prices would be RM1.35/litre – certainly not more than RM1.90. It’s time for a sharp drop in pump prices.”
In your reasoning, you forgot to include the component of the price that is subsidised by the government. (Assuming that the subsidy is flat rate, the fall in world petrol prices should incur a more than proportionate fall in petrol prices – unless the subsidy is quoted as a percentage of world prices.)
Of course, if you still remember, when the BN govt increased pump prices, it was not only due rising world prices, but also due to a cut in the amount subsidised, so I would believe this is not as simple the original math problem anymore.
Maybe what you would like to instead discuss is the government decision to cut subsidies and whether it is justifiable in the long run.
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Petrol price in USA averages USD2.087/gallon.
USD2.087 X RM3.58 = RM7.47/gallon
1 US gallon = 3.7854 litres
Petrol price in USA in RM = RM7.47/3.7854 = RM1.97/litre (Nil subsidy).
Petrol in Malaysia with RM0.30 subsidy = RM2.00.
Perhaps our Information Minister and Shahrir care to explain why subsidied petrol is more expensive than non subsidied petrol.
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It was on the news last night
http://thestar.com.my/news/story.asp?file=/2008/11/18/nation/2574907&sec=nation
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Good point raised by Anil… on losing sight to improve public transportation and develop alternate energy sources. I strongly believe that in the long term, Petrol should not be subsidized, and the subsidy should be used to also improve public transport system throughout the country. If you can afford to buy a Guzzler, you can afford to pay for higher fuel prices. Why should the poor subsidize the rich???
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anil,
by keeping petrol prices higher than what it should be, the govt is actually imposing an indirect tax, extra revenue critically needed to plug the shortfall arising from the commodity bust.
its like heads the govt wins tails the people loses.
thats no way out unless the govt stops the leakages. but how can this be done when the country is managed by UMNO which is known to be a deeply corrupt party.I really dont see how we can get out of this quadmire unless the corrupts are kicked out from misappropriating the limited resources.
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Anil you notice or not “Chain impact is only upwards not downwards”.
The bus fare(Express) was up 30% surcharge since Hari Raya month & suppose to be back to normal. I’m still being charge the 30% surcharge today even though the price is down. I just arrive KL this morning from Penang.
One more thing, the Penang hockers are too much when the fuel price up all go up, Now what? I think we should bycott these selfish hockers, who don’t share the fruit with others.
Don’t forget Makkal Sakti(People’s power) can do.
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The new pump price for RON97 is now RM2 per litre while RON92 will be sold at RM1.90 per litre. Diesel will be at RM1.90 per litre.
now i’m waiting for the the price of goods to be reduced.govt have to monitor “bad business people” who are reluctant to reduce their price.some NGO had also sperheaded the campaign to boycott any outlets that refuse to lower their price.
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Just as I had suspected!
KUALA LUMPUR, Nov 18 — Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad revealed today the government has stopped subsidising fuel since Nov 1 and been collecting taxes instead on all fuel sales.
Speaking to reporters in Parliament, he explained that even after the 15-sen drop today, which saw RON97 petrol dropping to RM2 per litre, and RON92 and diesel down to RM1.90, the government was no longer subsidising fuel at the pumps.
“Even if prices return to RM1.92, we will still have a bit of surplus,” he said, adding that subsidies had disappeared once the global price of fuel had dipped under US$65 per barrel.
Current prices are hovering at US$55 per barrel.
This gels with the 2009 Budget winding-up speech by Finance Minister Datuk Seri Najib Razak where he claimed a projected RM7 billion savings in fuel subsidies will be utilised to stimulate the troubled economy.
The statement was puzzling as the government had earlier said it would maintain a 30-sen fuel subsidy to keep pump prices below market prices.
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I would like to believe the present government will not be so proactive in doing all this (so-called) activities (reducing prices of essential goods ie: fuel and ect) if there is no pressure from the opposition. The main reason is that they (ministers) won’t feel the pinch as they spend dirty monies rather then the rakyat who earn the hard ways.
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Dear Anil,
Someone did a chart to compare the two trips overseas by the previous and present state government.
Can we have a chart with dates with the price of petrol with the price of oil per barrel.
Sometimes words get in the way
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Hi everyone,
Domestic Trade and Consumer Affairs Minister is quoted as “Even if prices return to RM1.92, we will still have a bit of surplus,” he said, adding that subsidies had disappeared once the global price of fuel had dipped under US$65 per barrel.
So, it seems that, instead of subsidy, the govt is making a ‘substantial’ profit from selling petrol at RM2!
What happens to his promise that whatever the global price of oil, the govt would subsidise the Malaysian public 30 cents per litre?
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A commodity bust? A credit bust yes, not a commodity bust.
It’s only a correction in a secular bull market. Much higher prices are inevitable (although they might be low for the near future).
The market pricing of petrol is exactly what should be done. It would pacify our great mathematician commentators by having lower prices, and get them to start funding a viable energy conservation program.
But maybe the first thing we need is a cabinet with brains instead of mouths. Is Anwar’s plan still on?
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They still treat the rakyat like fools because the car prices are still very expensive as compared to the South East Asia neighbours.
With the high vehicle taxes imposed in Bolehland, the petrol price should be much lower, since the rakyat are being forced to fork out more money to purchase a car.
The pump price should be RM1.20 per litre since the crude oil price has dropped to below USD 55 per barrel.
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fungus,
nothing puzzling.
the govt needs the money to plug the deep hole.
even if world crude drops to US$30, petrol price will not drop proportionately. simply, the govt is in dire straits. why? the revenue projections is based on US$125 per barrel! imagine at US$30 per barrel, whats the dang shortfall. UMNO needs to feed its supporters. where are they going to find the money? simple, just introduce an indirect tax via higher petrol price than what it should be. At least, Sharir came clean with his latest clarification.
By the way, if world crud egoes up to US$125 per barrel, you will pay the full price at the pump.
Well, the UMNO govt is telling you a simple fact. Either way, you are screwed. The screwing is just needed so that UMNOputras can continue their opulent lifestyle.
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