If inflation continues, will Malaysians be able to manage petrol prices?
Every week the price of Petroleum (RON 95, RON 97 and Diesel) here in Malaysia seems to be going through a yo-yo movement. Sometimes, it goes up and other times it goes down.
Just this week, the price of RON 97 went down by 4 cents to settle at RM4.80 per litre but will it still remain at this price next week?
The question on every Malaysian’s mind at this point is “how much longer can the Government continue to subsidize Diesel and RON 95?” With RON 97 costing more than double the amounts of the other 2 fuels, it certainly looks worrying for the average Malaysian car owner.
While it is safe to say that this is a problem many Malaysians would prefer to avoid, we should also remember that it could be a lot worse.
We are of course, referring to the price of fuel in our neighbouring nation, Singapore, where fuel prices are NOT subsidized.
So it does seem very likely that if things continue going on as they are and inflation cannot be curbed, then sooner or later, RON 95 and diesel will also no longer be subsidized just like RON 97, but what might that look like?
To answer this question, we, once again, look to Singapore.
The chart above shows the price per litre of each grade of petroleum and each company. All prices are not subsidized and have been updated as per the dates shown in the table as well, so we know it was all done recently.
We can see that the price for 92-octane (the closest equivalent to our RON95) costs anywhere between SG$3.26 and SG$3.30, converted to Malaysian Currency, that’s about RM10.30 per litre, whereas here in Malaysia, it only costs around RM2.05 per litre at the time of this writing.
So yes, while it does look worrying, as mentioned earlier, it could still be so much worse. So even if RON 95 was no longer subsidized, based on how much RON 97 costs, we can assume that RON 95 should also cost around RM4 to RM6 plus change should the subsides we Malaysians have grown so accustomed to were to suddenly cease to exist.
In all fairness, this is the reason why there have been so many Singaporeans hopping the border to pump some good old Malaysian RON 95 or even RON 97, since both are still way cheaper than fuelling up in Singapore.
So the next time you feel like complaining about the rising fuel prices here in Malaysia, just remember, since Malaysia is a petroleum rich country, fuel prices will never be as high (fingers crossed) as some of our neighbouring countries, Singapore and Thailand.
