Wednesday, June 4, 2008

Is it Malaysian Petrol Is the Cheaper?

Quoted from Life's Happening

The Malaysian government, on each occasion of announcing the fuel / petrol price increase would tend to compare with the neighbouring countries' prices. In doing so, they would say that our price was still the lowest in the region.

But has our Malaysian government tried to compare the fuel / petrol price with other oil producing countries? Malaysia is still a net exporter oil producing country at the moment.

A Germany-based company, GTZ International ("GTZ"), has done a survey in year 2007 on behalf of the World Bank in reviewing the fuel prices throughout the world. A common price denominator was fixed at US$0.38 per litre (Nov 2006 pricing), which was also the benchmark price for the world crude oil market. A good way to gauge when comparing different countries' way of measurement.

In GTZ's latest survey (click to download the 2 pages full survey), Malaysia has been listed at number 20. It shows that Malaysia's fuel price was the twentieth cheapest in the world. Not bad........... not true when the Malaysian government said that Malaysia's fuel price was the cheapest in the South East Asia region as Brunei's fuel price was even cheaper.

The Top Twenty list:-
1) Turkmenistan - US$0.02 per litre (ultra cheap, are you sure this is top grade oil?)
2) Venezuela - US$0.03 / litre
3) Iran - US$0.09 / litre
4) Libya US$0.13 / litre
5) Saudi Arabia - US$0.16 / litre
6) Qatar - US$0.19 / litre
7) Bahrain - US$0.21 / litre
8) Kuwait - US$0.22 / litre
9) Egypt - US$0.30 / litre
10) Yemen - US$0.30 / litre
11) Oman - US$0.31 / litre
12) Algeria - US$0.32 / litre
13) Brunei - US$0.34 / litre (Brunei is in the same region with Malaysia)
14) United Arab Emirates - US$0.37 / litre
15) Trinidad and Tobago - US$0.43 / litre
16) Azerbaijan - US$0.46 / litre
17) Ecuador - US$0.47 / litre
18) Angola - US$0.50 / litre
19) Nigeria - US$0.51 / litre
20) Malaysia - US$0.53 / litre (approx. RM1.71)

You have to know that the top twenty countries are oil producing countries and also net oil exporters. The US$0.38 per litre benchmark price was based on the crude oil price of US$60.20 per barrel. At that point of time, the Malaysian government has already mentioned that they have subsidised the fuel / petrol price heavily to the tune of tens of billions (Ringgit Malaysia currency).

As can be seen in the GTZ 2007 survey, during the crude oil price of US$60.20 or US$0.38 per litre, Malaysian fuel price was already being retailed at petrol station at the price of US$0.53 or RM1.71 (using the current currency exchange rate of US$1.00 = RM3.23).

The Malaysian government has been maintaining the fuel price at US$0.59 or RM1.92 and it would have started subsidising the fuel price if it hits above US$93.46 per barrel or US$0.59 per litre (approximately). The crude oil price hit US$94.00 per barrel on 20 Oct 2007.

Unless the Malaysian government can proof that this GTZ 2007 survey done for World Bank is wrong, otherwise please tell us what kind of oil subsidies were our Malaysian government talking about all these years?