INSAP: Show Malaysians how diesel prices are calculated

The Institute of Strategic Analysis and Policy Research (INSAP) urges the Ministry of Finance to disclose the full inputs used in each weekly diesel price calculation, specifically the Mean of Platts Singapore (MOPS) gasoil benchmark and the US dollar to ringgit exchange rate applied.

Diesel in Peninsular Malaysia reached RM5.52 per litre today. Malaysians are told this price is determined by the Automatic Pricing Mechanism (APM), yet the government has not disclosed the actual MOPS figure used in the weekly calculation. While the formula is known, the workings are not.

This is an accountability gap that must be closed, particularly when the price of diesel directly affects the cost of food, goods and services for every household in the country.

INSAP's analysis of the diesel pricing pattern over the past three weeks, raises questions that warrant a clear response from the government. We make three specific calls:

First, the Ministry of Finance should publish, alongside each weekly price announcement, the MOPS gasoil average and the USD/MYR exchange rate used to derive the retail price. This is standard practice in countries such as Australia, where the Australian Institute of Petroleum publishes MOPS benchmarks weekly.

Second, where the announced retail price deviates from the APM-derived figure, whether through a cap, a smoothing mechanism or any other adjustment, the government should disclose the nature and size of that deviation. Malaysians are entitled to know whether they are being shielded from a higher price or paying above what the formula produces.

Third, the government should commission an independent review of the APM framework to assess whether the APM formula remains fit for purpose in a market where refined product prices can diverge sharply from crude benchmarks due to refinery destruction, sanctions and shipping disruptions.

Diesel is not an ordinary commodity. It is the fuel that moves Malaysia's food, builds its infrastructure and powers its industries. When its price rises by 77% in three weeks, every ringgit of that increase eventually reaches Malaysian households through higher prices at the market, the grocery store and the construction site. A government that asks the public to bear these costs must also be willing to show the public how those costs are calculated.

Datuk Dr Pamela Yong

Chairman

Institute of Strategic Analysis & Policy Research (INSAP)

The Institute of Strategic Analysis and Policy Research (INSAP) is a Malaysian independent non-profit think tank established in 1986 that focuses on political-economic research, public policy analysis, and nation-building.