No rationale to sell RON95 at more than RM1.06 a litre

When I wrote an article previously about crude oil being below US$50 a barrel, I envisaged that the price of a crude oil barrel will be sold for US$50 in 2015. And sure enough, it was just over US$49.61 a barrel for delivery in April.

In an article written on March 7, 2015, by The Malaysian Insider, a robust US jobs report had sent the dollar soaring, driving a sell-off in the oil market that left US futures Benchmark back below US$50 (RM184) a barrel.

“West Taxes Intermediate for delivery in April slid US$1.15 to US$49.61, when Brent North Sea crude for April was US$59.73 a barrel in London,” the report noted.

For your information, it was sold below US$50 a barrel before the end of 2015 - or rather to be exact, US$36.

In view of the foregoing, the recent announcement of a plan to reduce petrol prices in January 2016 such as by 10 sen to RM1.85 per litre for RON95 and 20 sen to RM2.25 per litre for RON97 are still expensive. These new prices for RON95 and RON97 are neither relative, nor realistic to current low crude oil prices.

As I had mentioned previously, the price for one litre of RON95 should be sold at RM1.06 and nothing more.

According to hearsay in fact, a leading US oil company is putting on hold future plans for expansions, research and developments in view of existing crude oil prices - just to keep basic businesses going on until the oil prices recover (because at US$36 a barrel it is barely sufficient to cover production costs).

This year not better than 2015

Worse still, the market is not looking good this 2016. It has been predicted by some quarters to be not better than 2015. Like Phua Chu Kang said in his popular tagline, "Don't Play Play.”

Yes, it is wrong to overprice pump petrol prices when present crude oil prices are down-to-Earth cheap and that any recovery is a long way to go.

And yes, the public expects the government to lower petrol prices even further instead of just 10 sen and 20 sen each time when a price reduction takes place.

You see, there was a time in 2015 when the price of RON95 came down by 20 sen a litre instead of 10 sen, but sadly it was only for a short while because soon it went up again within days by 25 sen, despite the crude oil prices still being cheap.

So, there is no rationale and it is outrageous to sell RON95 at RM1.85 per litre, or rather more than RM1.06 a litre.

This is a call to the government to relook at the prevailing crude oil prices and to reprice the petrol pump prices relatively for what they paid to buy crudes from outside sources.

By the way, it will take days or even months before crude oil prices rise again, let alone a safe time to keep petrol prices down and more longer.

Really, the consumers should be given the benefits to enjoy using cheaper petrol when crude oil prices have fallen to as low as US$36 a barrel - and especially at a time of an economic slowdown.

Lest the government raise petrol prices again when crude oil prices take a stunning turnaround, to escalate beyond US$100 a barrel, albeit unlikely.

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LAU BING is a community activist and writer in Subang Jaya. -Mkini