Fuel Wallet GaugeIt looks like we might not need to worry about May 1st after all. Apparently the complicated (and likely expensive) tiered subsidy structure that we’ve been scratching our heads over has just been scrapped. The Malaysian Insider cites sources within Putrajaya in reporting this good news, and apparently the decision was only made ‘recently’.

It must have been very recent as just less than a week ago, the Domestic Trade Minister said he would be revealing the system’s details in March and that we would be very happy about it – perhaps what he means it that it was scrapped in favor for a simpler system!

But according to the report we still might see a small price hike of 10 sen before the first half of this year. The current price structure of RM1.80 per litre for RON95 and RM2.05 per litre for RON97 was introduced on the 1st of September 2009 and at that time crude oil was US$72.75 a barrel. Crude oil now goes for US$79.11 per barrel – which represents about an 8% hike. It had previously breached US$84 per barrel in January. A proportionate 8% hike in RON95 prices would be about 15 sen – so a hike of 10 sen would be actually less than the 8% hike in crude oil prices.

The thing is, I’m not sure if we have more time now or if there is another simpler and more cost effective subsidy system in the works to be implemented by May 1st. OR worse case scenario, the government reverses its decision again and decides to go ahead with the tiered system. Unless something comes out from the relevant ministry of the Prime Minister’s Office, we’re never going to know for sure. Seriously – it seems that most of the time we just don’t know for sure whenever it comes to policies. Either way, it would still be wise to take a look at our fuel expenditure and the kind of vehicles we use to ones that are more efficient and frugal.

We should be prepared for the day when the government eventually pulls the plug on subsidies here in Malaysia. Hopefully by then the economy would have progressed to a point where we can actually afford the unsubsidized prices without issues.