“Out of reality” fuel prices slammed as retail diesel price skyrockets to all-time high of RM6.72/litre

 

DETRACTORS have lambasted what they deemed as “illogical” fuel pricing as retail diesel price in Peninsular Malaysia spiked to a record RM6.72/litre for the April 9-15 period, up 70 sen from previously.

This is despite the Finance Ministry (MOF) acknowledging that although “global crude oil prices are dropping, pump prices haven’t ”.

“ Actually, pump prices aren’t determined by today’s market price because pump prices are set based on the average price from the previous week,” it justified in a social media post following release of the latest weekly fuel price list.

“ Did you know that the current supply was purchased at a higher price and is still affecting pump prices. Global oil prices surged suddenly over five weeks, causing costs to rise, including insurance and logistics.”

Editor’s Note: Diesel seems to steal the limelight despite the price of unsubsidised RON95 and RON97 have also spiked by 40 sen each to RM4.27/litre and RM5.35/litre respectively.

Whether the MOF’s backdated calculation method appeals to the senses or otherwise, an enraged former UMNO supreme council member Isham Jalil made a shout out to Prime Minister Datuk Seri Anwar Ibrahim that he must as well “don’t stop at RM6.72 but raise the price to RM10/litre to make it easier to count the money”.

“World oil prices have dropped by more than US$20/barrel in the past two weeks,” the now opposition-slant political activist countered in a Facebook post.

It has dropped 15% to US$90/barrel on April 8 from US$106/barrel last week. The week before, it dropped from US$116 to US$106.

America has also announced that they’re postponing the war. We can also pass through the Strait of Hormuz.

But yet you went ahead to raise the price of diesel by +70 sen in a week, +RM1.20 in these two weeks and +RM2.80 in a month from RM3.92 last month to RM6.72 today. Doesn’t that sound crazy to you?

‘Diesel demand is inelastic’

Former Barisan Nasional (BN) strategic communication deputy director Datuk Eric See-To who has been a staunch critic of exorbitant fuel price hike in recent times posed two questions which he claimed as “actually enough to show why the Madani’s economic policy seems absurd”.

1. Which country in the world has its diesel priced at RM6.72/litre which is more than three times that of RON95 (RM1.99/litre)?

2. Which country has a diesel price gap of more than three times within its own borders as evident by the diesel price in Peninsular Malaysia at RM6.72/litre compared to RM2.15/litre in Sabah and Sarawak?

Reiterating his stance that diesel is the lifeblood of the nation’s economy, the Madani critic argued that diesel is unlike “RON95 which is a consumer fuel, hence its demand is more elastic”.

“People have the option to save, drive less, share cars, work from home or use public transport,” he rationalised in a FB reaction to the latest spike in diesel prices.

“But diesel tells a different story. It’s used by almost all sectors of the economy: logistics, manufacturing, construction, agriculture, livestock, tourism, plantations and mining.

“As such, its demand is inelastic. The economy depends on it. Reducing diesel consumption means reducing economic output.”

Based on such economic reality, the often-dubbed loyalist of disgraced former premier Datuk Seri Najib Razak contended that when diesel prices rise, “the impact doesn’t stop at diesel users but will spread throughout the supply chain”.

“From farms → transportation → factories → wholesalers → shops → consumers. Each stage will add costs and pass to the next stage. Eventually the price of goods will increase in layers,” contended See-To who previously blogged under the Lim Sian See moniker.

When the price of diesel is increased, costs will double throughout the economy. That’s why, in most countries, diesel is usually cheaper or at least on par with petrol.

“But Malaysia is a strange case with diesel is more than thrice more expensive than RON95. This directly accelerates inflation. –  Focus Malaysia