KUALA LUMPUR, Feb 1 — Malaysia’s petrol prices are based on refined petroleum product prices and not crude oil prices, Barisal Nasional (BN) said today following criticism by opposition leaders.
Opposition leaders had criticised Putrajaya after petrol prices increased for the second consecutive month under the managed float system ranging between 10 cents to 20 cents increase, arguing that there is no basis for the increase due to global crude oil prices dropping.
But in a statement, the BN Strategic Communications team argued that the estimation of petrol prices should not be based on crude oil prices.
“Our managed float system uses the average price of the refined product — not crude oil — for the previous month to determine the retail pump price for the next month. Specifically, Malaysia uses the Singapore Means of Platts (MOPS) pricing for petrol and diesel — which is public information,” it said.
“While global oil prices had increased in recent months due to an agreement to cut production by oil producing countries — which also benefits Malaysia, the price of refined oil products have increased further due to other reasons,” it added.
It said that the MOPS pricing for MOGAS 95 unleaded petrol is materially higher than the average price in December 2016.
“It was widely reported over the past month that oil refineries in South East Asia had enjoyed higher pricing and margins due to an unusually higher than normal number of refineries around the world shutting down due to fires and major maintenance. This had reduced supply and increased the refineries’ margins and pricing — hence the higher MOGAS 95 prices,” it added.
It stressed that refined petrol prices may differ from crude oil prices due to global supply and demand factors.
“Knowing that it is a managed float system, it is ridiculous that opposition leaders blame the government when petrol prices increases due to global market prices increase but when petrol prices are reduced, they claim this is due to global prices and gives no credit to the government,” it said.
BN also said that the while the RM 2.30 per litre price for RON 95 is higher than compared to what Malaysians enjoyed previously, it is also consistently among the cheapest petrol price in South East Asia and also among the 15 cheapest in the world.
“In Asean, our RM2.30 per litre price for February compares favourably to Indonesia (RM2.73), Thailand (RM4.10), the Philippines (RM3.72) and Singapore (RM6.56),” it said.
“While a managed float would mean that Malaysians has to bear with higher petrol prices when global prices increased, this also means we had also benefited from prolonged period of low refined petrol prices over the past two years when it had reached as low as RM1.60 per litre,” it added.
Putrajaya abolished fuel subsidies and switched to the managed float system in December 2014, which changes petrol pricing monthly according to market forces.