Malaysia increases fuel prices while other countries race to reduce prices

RATIONALISATION. That’s the word for the day. Maybe even the word of the week. Unless you didn’t know already, the Malaysian Government yesterday announced an increase of 20 sen for the price of petrol in the country. Effective 12.01am today, the new price for RON95 is RM2.30 per litre while diesel is at RM2.20 per litre.

Of course, the Domestic Trade and Consumer Affairs Ministry would rather NOT phrase it as an increase of price.  They would rather prefer to phrase it as “a reduction in fuel subsidy”, and to justify the move, they have once again decided to go with that magic word – ‘rationalisation’.

“Although the decision to reduce the fuel subsidy by 20 sen, the government estimates it still has to spend more than RM21 billion in subsidies for fuel-RON95, diesel and Liquified Petroleum Gas (LPG). This decision is in line with the government's subsidy rationalisation policy to ensure the country's finance remains strong," a statement from the ministry said.

Of course ‘rationalisation’ hasn’t always been their measure of justification. Prior to the ‘election-tsunami’ of 2008, their favourite argument was that the global price for oil had increased. That reasoning is no longer valid for use (some would say it never has been since we are an oil-producing country). In fact the global oil price is currently at its lowest in two years.

Just two days ago, The Globe And Mail reported that oil prices are sinking as rising fears of global oversupply is emerging. “Oil prices plunged to two-year lows, ending a quarter in which the energy market shifted its focus away from geopolitical risks and to the growing global crude surplus,” the report said.

“In trading Tuesday, the leading North American benchmark, West Texas Intermediate, fell $3.41 to $91.16 (U.S.) a barrel, while the international standard, North Sea Brent, dropped $2.70 to $94.49. While WTI dropped 13 per cent over the quarter, Brent fared even worse – losing 17 per cent from its June peak – because growing U.S. production pushed out imports to the Gulf Coast from Nigeria and North Africa, which were forced to compete for buyers on the slumping international markets.”

Furthermore this global drop has seen other countries actually reducing their petrol prices. Last Tuesday (just one day before we announced our increase), India cut the price of their petrol by 54 paise (4 sen) per litre. On that same day, consumers in the United Kingdom were able to enjoy a reduction of 5p (27 sen) per litre for fuel. RAC fuel spokesman Simon Williams said: “The wholesale price of both petrol and diesel has been low for around three months. And as a result motorists have been enjoying some of the cheapest prices for over three years, but this cut will take us to a new low, the likes of which we haven't seen since late 2010 (or) early 2011."

Naturally the increase has caused an uproar for Malaysians. Many motorists were seen queuing up at petrol stations last night while netizens expressed their displeasure with the government’s latest move. “Something must be seriously wrong with its financial management and this just shows its inability to manage expenses. It is sad that the people are the ones who have to suffer from this major defect of theirs.

Since the 2013 General Election in May of last year, this has been the third time the price of petrol has been increased.

MD

• Najib vows no RON95 price hike - KUALA LUMPUR, Feb 25 — Datuk Seri Najib Razak promised tonight that the pump price of RM1.90 per litre for RON95 would be maintained despite the escalating global oil price.