21 November 2014

RON95 Petrol: What does it mean by NO MORE SUBSIDIES ?

Today, the hottest topic in town was "No more subsidies on RON95 and Diesel starting Dec 1". While the starting date is just a mere 10 days from now, it catches every Malaysian by surprise. No wonder netizens share this news all over in social medias discussing about this matter and alert other petrol users.

How to determine the prices?

Based on news report, the Domestic Trade, Cooperatives and Consumerism minister, said the retail prices of RON95 and Diesel will be fixed according to managed float, similar to the mechanism dictating the RON97 petrol price. He added that there will be an announcement at the end of each month to set the following's month fuel prices, to be determined based on a monthly's average price.

What's the rationale behind?
Many observers see this as the beginning step for Government to start implementing the much debated "income-based fuel subsidies" which is based on salary of an individual. Anyway, how was it going to be implemented was still unclear at this juncture.

How about RON97?

  • First, we saw RON95 price increase by 20c to RM2.30 on Oct 2.
  • Second, we saw RON97 price decrease by 20c to RM2.55 on Nov 19. 
  • Then, starting Dec 1, RON95 and diesel price will be no more subsidized.

Wait... Something was wrong over here... Why the more premium RON97 will remained subsidized after Dec 1? Shouldn't it be another way round instead?

What does it mean?

If world oil prices shot up in the next few months, we may experiencing a more premium RON95 (in terms of pricing), if RON97 prices remain unchanged. Of course, we as a consumer will make a comparison and pump accordingly. In fact, many people started to pump RON97 due to the mere 25c price difference currently. Happy pumping !!!

1 comment:

  1. It's funny that when subsidy is take out, the price goes down on Dec for RON95, instead of goes up.


Finance Malaysia Blog appreciates your comment. Cheers!