We may not see our fuel prices ever dropping below RM1.92 per litre, if the current Domestic Trade and Consumer Affairs Minister gets his way. Minister of Domestic Trade and Consumer Affairs is of the opinion that the government should scrap the RM0.30 per litre fuel subsidy if the cost of fuel minus the subsidy ended up being less than RM1.92 per litre.
This is because he feels RM1.92 per litre is a reasonable price to pay for fuel in Malaysia. In fact, since a floor price of RM1.92 per litre is being suggested, we could also see sales tax for petroleum introduced if unsubsidised fuel ends up being priced under RM1.92 per litre!
“I believe that we should try as best as possible to reduce or even stop forking out money for fuel subsidy and use it for development and economic purposes. Despite a decline in global fuel price, the amount of subsidy the government has to fork out is still substantial. I also believe that if the price is any lower than what I have mentioned, the public will not practice wise spending because an essential item is cheap,” said Datuk Shahrir.
The new higher fuel prices has forced me to be more frugal with my accelerator pedal. My driving is alot smoother and I managed to stretch my mileage from about 450 to 500km per tank to 620km per tank thanks to a new driving pattern. But at the same time, you have to acknowledge that those from the really poor income bracket need all the help they can get and would definitely benefit from having a fuel price lower than RM1.92 per litre without increasing their consumption unreasonably!
Government fuel subsidy expenditure for the months of June, July and August 2008 was RM1.97 billion, RM1.95 billion and RM1.42 billion respectively. In addition to that, the government also paid out an additional RM2.5 billion between April to September 2008 for the RM625 per vehicle subsidy.
“The government has spent up to RM16.8 billion just on fuel subsidy and RM2.5 billion on rebates for motorists and motorcyclists. All that means from January to December, we’ll be spending about RM19 to RM20 billion. If we can save some money on subsidy, that savings will be spent to tackle the issue of economic growth,” the Minister added.
The RM625 subsidy will be gone next year. In its place will be a new system that has yet to be decided by the government.