Petrol prices at the pump will be switched from its current fixed price of RM2.70 per litre to a floating amount according to the month’s average current market rates with a fixed subsidy of RM0.30 per litre. This floating amount will be capped to a maximum of RM2.70 per litre (current price), which means the 30 sen subsidy will increase to cover the higher cost of fuel if it increases over RM3.00 per litre.
The government said June 2008’s subsidy was an average of 64 sen per litre as crude oil averaged at US$132 during the month, but it has peaked at US$149 recently. According to calculations provided by the dailies based on August 1st’s crude oil price of US$128.19 per barrel of 159 litres, the price of RON97 petrol could have dropped from RM2.70 per litre to RM2.64 per litre (RM2.62 production cost based on crude oil price + transport, commission and misc cost of RM0.32 per litre – subsidy of RM0.30 per litre).
It’s time to monitor August 2008’s average monthly crude oil price closely. What we want is for average oil prices to drop to USD128 and below, then we will be able to see a nice reduction in petrol prices on the 1st of September.
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From what i understand, there’s no exact amount how much litre of gasoline/petrol & diesel could extract from crude oil. All depends on the refinery and the finest. The dailies pointing out the ‘159 litres’ total liquid contain per barrel, which not being process yet. Perhaps if anyone know the calculation, mind to share ?
when the price increase, the clever G took immediate action to raise the price. now, almost 2 weeks the price dropped, why waiting until september to drop the price?
Sigh! Have to wait somemore is it? Naik that time never wait wan!!
If the G would have been patient, and using other means to tackle its political turmoils, it would have saved the country millions, or perhaps billion of money used to soothe the rakyat, and not forgetting the new bocors while in the progress.
If it were to be patient, and obtained expert advises from the correct ppl., it would not have resorted to hiking up the prices suddenly, and using up valuable fund to correct the mistake later on.
In this situation, a gradual hike which then leads to market dictate prices would be ideal and more accomodatable.
Dudes
Oil is traded as futures. They don’t sell August contracts now. They sell Sept contracts. What you buy today, is only delivered earliest in Sept. That is if there is someone who has the oil to sell it to you at your requested price.
See WSJ links below.
http://online.wsj.com/mdc/public/page/2_3028.html?category=Energy&subcategory=Petroleum&contract=Crude%252520Light%252520Oil%252520Comp.%252520-%252520nymex&catandsubcat=Energy%257CPetroleum&contractset=Crude%252520Light%252520Oil%252520Comp.%252520-%252520nymex
The political turmoil is not due to oil price. Its the politicians trying to use it as political mileage. Wake up. Open your eyes. Its not the Government who wants restlessness. The people ask for it. They ask for anarchy and they will live in it. They will pay for it dearly, much more than just the price of oil at the pump.
I doubt what the G said is true nowadays.
IMHO, its better to remove the subsidy, but uplift all the taxes/duties on imported cars (especially on hybrids and diesel cars). The billions in savings from the subsidy is better use on healthcare and education. Not to forget how many billions we can save if we have better transparency; all those ‘bocor’ money laundered into the pockets of the filthy rich politicians.
Emulate Britain & France, by offering free healthcare & education. How? By having Zero ‘bocor’ cases involving Government procurement and prudent public spending.
one more week to go, Pak Lah has promises us that if the price goes down and maintain stable in 3 weeks, then we can see oil price drop soon in Malaysia. come on let’s hope for it.
bobdbilder – whilst you are right that a lot of oil is traded for future deliver, ie futures, it is not the only way.
The price you see quoted in the press is almost always the ‘spot’ price ie for delivery right now. Depending on market forces the future price maybe be higher or lower than the spot price, and will vary from dealer to dealer, thus futures only have an average price where as spots have an actual price.
Futures contracts can be sold for delivery anytime in the future in multipules of one month. A lot of people wonder why the futures market exisits, but if you imagine you own a national airline it is much easier to plan for, say next years budget, if you have bought oil futures so you know exactly your fuel costs even if the spot price goes uo or down. Some time you will win, sometime you will lose – the fundamental reason we hedge
How did they get the “average” price? Daily? Weekly? Or end of the month? Or just highest+lowest devide 2?
When they say its 64 cents in June, I feel kinda cold. Coz it sound like even thou rakyat is bleeding thru the nose at the new fuel price but gov is already subsidizing more then they promised?
From my study and understading actually we don’t really have a good and proven mechanism to simply reduce the price of oil unless it is no longer subsidised by the G. If there is still an element of subsidy especially in term of cash then it will really coz a lot of trouble and problem which IMHO it will cost more to the G.
It is as simple as on how do they want to calculate the loss suffer by oil company and station dealer for the remaining product in their stock/depot whenever G reduced the price since they are buying at higher price. We are talking about 3000 station and few depot which stock multi million liter of oil at any time meant for domestic used. ? How do they want to deal with that.?
this G is disgraceful
i agree with shah74 above. A proven and good mechanism is need in order to reduce the price. As long the subsidy is there the trouble is there. What happen if the oil market price increase again? Then petrol price increase again. Is there going to be another round of price increase in others goods and services? If this happen rakyat will suffer more.
if petrol price goes down,then good for us…if not, i will not be frustrated bcoz i think this is jz another political stunt by the flip-clop government just before the permatang pauh by-election
doubt what the G said is true nowadays.
IMHO, its better to remove the subsidy, but uplift all the taxes/duties on imported cars (especially on hybrids and diesel cars). The billions in savings from the subsidy is better use on healthcare and education. Not to forget how many billions we can save if we have better transparency; all those ‘bocor’ money laundered into the pockets of the filthy rich politicians.
Emulate Britain & France, by offering free healthcare & education. How? By having Zero ‘bocor’ cases involving Government procurement and prudent public spending.
I AGREE WITH YOU, NORMALUSER!!
Petrol prices will continue to rise, so before start of new month, fill full tank then wait and see.
most comments are like speculators and government ministers… :D
or maybe soothsayers? predicting the future price?
The G is like S**t… when wanna raise the price… tomolow also can… when wanna decrease the price… have to wait ar? Not fair ma…
Hai,
Yes, most of you “analyst” up there are right. What kind of mechanism the Government going to use to predict oil prices? Speculating. That’s the best way in fact that’s the only way. Call it “bomoh”, soothsayers and prediction but its obvious the flip-flop Government is up to something. If the Government allows the Local Fuel Price to be fluctuating in accordance to the World’s Fuel Price, might as well remove that good-for-nothing 30 cents subsidy. If the Goverment want to “bribe” its citizens at least bribe us with Fuel Price of RM 1.90/litre. If not, the next best course of action is to totally remove the car duties and taxes. Make improted cars cheap, heck, please make imported HYBRID or FUEL EFFICIENT cars cheap. Proton will have to adhere the facts that their Campro Engine is a fuel guzzler and there’s a need to get new high efficient engine. Make insurance policy as optional and totally reduce the price of road tax. Do what it takes to ensure the stability of the Malaysian economy.
But the most important part would be to UPGRADE our forsaken public transportation system (the taxi, bus and trains). Dammit, you should see the crowd at LRT during PC-Fair last week at KL Convention center, our transportation system is over capacity.
Just like our dear ex-premier said in his blog at (http://server-2.chedet.com/) …
The Solution: Remove the leader responsible.