Oil prices go up and up, but not down

mathematician and an economist, the government raises the cost of petrol when there is a hike in global prices, but does not decrease it when the price dips.

PETALING JAYA: Simply put, Newton’s law states that what goes up must come down. But oil prices in Malaysia defy gravity.

According to a mathematician and an economist, the government raises the cost of petrol when there is a hike in global prices, but does not decrease it when the price dips.

Applied mathematics expert, Assoc Prof Hamid Yeop and economics lecturer, Prof Amir Hussin Baharudin, pointed out that as a petroleum-producing nation, Malaysia rakes in multiple folds in profit due to the rise in oil prices, and this allowed for prices in the domestic market to be reduced.

Hamid said that most oil-producing nations fixed their domestic oil prices much lower than the international market price compared to Malaysia.

“Anyone who understands this can prove that petrol prices in Malaysia is not determined by the world market. While we pay RM2.70 per litre, there are nations that sell them for 16 sen per litre.

“This formula was discovered during a research in 2008. The market price for fuel rises and drops but in Malaysia it is impossible to fall,” he told Sinar Harian.

The mathematician also said that according to the research, petrol prices in the domestic market could be reduced to 30 sen if this formula is applied.

“In fact (local petrol price) can be reduced to 30 sen a litre if the formula is used to reduce petrol prices and that of other produces, which will in effect help alleviate poverty,” he said.

Citing the oil palm industry as an example, Hamid said: “We’re a palm oil producing nation. If previously the price was RM1,000 a tonne, and now it has increased to RM3,000, do we profit or lose? Of course it is a three-fold profit.”

“The same goes for crude petroleum,” he said.

“Malaysia is a oil-producing nation and member of Opec (Organisation of Petroleum Exporting Countries). If it sells 700,000 barrels a day at the rate of US$130 a barrel (at the exchange rate of RM3.80 for US$1 previously), this means the annual income will be US$33 billion, more than RM126 billion.

“With an estimated income exceeding RM1 trillion for a period of 10 years based on the stated exchange rate, can’t Malaysia reduce its petrol prices?” he asked.

Willing to share formula with all parties

Hamid also stated that the government’s reluctance to reduce the price of oil went against Prime Minister Najib Tun Razak’s “people first” motto.

The mathematician added that while this formula is not accepted by the government, he is willing to share it with all parties for the sake of the people’s well-being.

Echoing a similar stand, Amir said if global petrol prices shot up, it will mean an increase in profit for national petroleum giant Petronas.

“Furthermore if petrol price rises, demand does not decrease. A change in the external market price is not a reason to raise prices locally,” added the USM lecturer.

Contacted by FMT, PAS information chief Idris Ahmad welcomed the academics’ offer to share the formula with Pakatan Rakyat.

“Of course we in PAS and Pakatan welcome any offer from academics to share formulas, especially if we succeed in capturing Putrajaya in the next general election.

“I wish to congratulate the academics. This is not a question of them supporting the opposition. This is a question concerning the welfare of the people,” he said. - FMT