Puzzled over diesel price hike

  • Nation
  • Monday, 01 Dec 2014

Being prepared: Syufian Zakaria, 27, fuelling up at a petrol station in Selayang Jaya after the diesel price hike was announced.

PETALING JAYA: Lorrymen, bus operators and consumers are puzzled by the three sen increase in the price of diesel although world oil prices have fallen to record lows.

Even analysts and experts are puzzled.

One economist asked what figures the Government was using in the formula to arrive at these prices.

“We have the formula, but not the values that have been put in.”

Pan Malaysia Lorry Owners’ Association president Jong Foh Fit said he was shocked to learn about the increase as the association had been expecting the price of diesel to drop.

“We are wondering why it went up instead. I believe the public also wants to know how the Government worked out the price,” he said.

Asked if the cost of haulage would increase as a result, he said: “Our charges are not regulated by the Government. It is up to individual owners to decide if they should increase their charges.”

Selangor and Kuala Lumpur Lorry Operators Association secretary-general Alvin Choong claimed that the pump price of diesel was now even higher than industrial diesel supplied to factories.

He said industrial diesel cost between RM2.05 and RM2.10 per litre, compared to the pump price of RM2.23 per litre.

Choong said the three sen increase could not be justified because diesel subsidy was cut by 20 sen in October.

“There will be no choice but to increase rates,” said Choong, who believed that the Government was attempting to create a buffer against future increases in diesel prices.

“It could be that the money saved will be use as subsidy should diesel price rise later,” he said.

Pan Malaysian Bus Operators Association president Datuk Mohamad Ashfar Ali said he feared that some of his 120 member companies might fold due to escalating cost of operations.

He said the price of express bus tickets were regulated and the operators were not allowed to increase rates.

“Operators are already under tremendous pressure,” he said.

He said the average express bus used between 6,000 and 7,000 litres of diesel every month, of which only 2,880 litres were bought at the subsidised price of RM1.88 per litre and the remaining bought at full retail price.

Fomca secretary-general Datuk Paul Selvaraj said the Government had to explain why diesel prices had been increased as it was inconsistent with world prices.

“The ministry needs to give us an explanation. We are in support of leaving prices to market forces but it has to be consistent,” he said.

Paul said the biggest problem for Malaysians was still public transport.

“Our public transport needs to be improved first. We need an alternative, especially for the lower income group, so they are not burdened by fuel prices.”

An analyst with a prominent bank said the new price “made no sense”.

“RON95 is down. So is RON97. Diesel comes from crude oil as well, so it should also decrease by a few sen at the pump,” he told The Star on condition of anonymity.

Another analyst reckoned that the three sen increase might have to do with supply and demand in the international market.

“They may be translating prices from the international market to the local market. It’s not a must that the reduction in prices of diesel and RON95 must be same,” he said.

Diesel still remains cheaper than petrol. It was sold at RM2.20 with subsidy but the price rose to RM2.23 as of today.

The price of RON95 petrol without subsidy is RM2.26 while that of RON97 is RM2.46.

Alliance Bank research head Manokaran Mottain said the new prices were within the predicted margins.

“We may see lower prices over the next few months if the price of crude oil continues its downward trend.”

He felt that as inflation was lower than predicted, the price of goods and services would remain steady.

Relate story:

Cheaper RON97 and RON95 for December

Motorists welcome petrol price reduction

Ample job opportunities in Johor oil and gas sector

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