ACTUAL PETROL PRICE RISE IS 23 SEN



Saw this article on business times today :


PRICES of petrol at the pumps have actually risen 23 sen a litre and not 78 sen, after factoring in the cash rebate of RM625 a year given to vehicle owners, says Second Finance Minister Tan Sri Nor Mohamed Yakcop.


He said the rebate is targeted at helping the needy people, not the rich or unscrupulous such as smugglers.


"Some people question the rationale of increasing petrol prices by 78 sen and then giving rebates. There is a difference.


"If we were to increase petrol prices by 23 sen without giving any rebate, this will benefit all, including the rich and unscrupulous smugglers who do not actually need subsidised fuel," he told reporters yesterday after officiating the launch of AmanahRaya Bhd's Annual Report 2007 and the Safeena Islamic Marine Fund in Kuala Lumpur.

"This was one of the main reasons for the restructuring of subsidies, especially on fuel," he said.


Comments : My dear 2nd finance minister, have you consider the consequences of this drastic hike? Even if your reasonings that the actual hike is only 0.23 is logical,it will not prevent unscrupulous traders to take advantage of this to hike their prices. The enormous inflationary pressure from this hike will harders to tackle then the enforcement upgrade needed to check on those smmuglers. Even with the present rebates system,rich people are still benefitting. A rich man with several BMW or luxury cars below 2000cc will still be getting their rebates even if they only use the cars occasionally. If smuggling is the main issue,then better enforcement is the right and proper solution. You don't burn down the whole house just because of a few mosquitoes.



In the case of diesel, Nor Mohamed said its price remains at RM1.43 a litre as 80 per cent of the users are on the fleet card system.



"The price of diesel was increased by RM1 to RM2.58 per litre, but for those in the transportation business, the price remains at RM1.43. Previously, the difference between those using the fleet card and subsidised diesel was 15 sen. Now, it is RM1.15," he said.



Five billion litres of diesel are used per year, of which four billion go through the fleet card system."This means that 80 per cent of users pay RM1.43. There is no change in price," Nor Mohamed said.



He added that the days of crude oil prices hovering at US$40 to US$50 (RM131 to RM164) a barrel are over."Crude oil prices may fall, but in the long term, it will remain at a high level, probably between US$80 and US$120 (RM262 and RM392) per barrel," Nor Mohamed said, adding that of the current US$130 or US$140 (RM425 or RM458) per barrel pricing, about US$30 or US$40 (RM98 or RM131) are merely "speculation premium".