Weekly Fuel Price begins…So does the Worry.

Automologist LING observes the hoo-ha over the new weekly fuel pricing system that began today. 

The new weekly system to determine pump prices begins today, and drivers will experience an “easier” transition as fuel prices fall to RM2.13 for RON95, RM2.41 for RON97 and RM2.11 for diesel (compared to RM2.30, RM2.60 and RM2.20 earlier). The prices will remain so until the next revision on 5 April.

Like we reported earlier, fuel retailers can offer discounts on the ceiling prices; however, not at liberty, but with permission from the Domestic Trade, Cooperatives and Consumer Affairs Minister. There are many people – pundits as well as ordinary folks – offering their opinion about whether the new system is better or worse than the one we just left behind.

The Petrol Dealers Association of Malaysia (PDAM) voiced its concern that retailers with lower sales volume would not be able to afford to give discounts. Denis Ngau, an assemblyman from Sarawak, echoes similar sentiments when talking to the Borneo Post, saying that rural retailers would not be able to offer discounts due to the low volume. Meanwhile, people on the streets, in various news reports, are worried about having to keep up with weekly prices and manipulation by kiosk operators to maximise their profits.

Now, I’ll tell you what I’m not worried about. I’m not worried that I have to pay more for fuel when I am in rural areas or when I’m pumping petrol in a station located where demand is weak. The new system, after all, is not about reducing pump prices to ease the burden of the rakyat (although that is very important and needs to be addressed urgently, because…well…read until the end), but to reflect more accurately the market price. The option to offer discounts is to encourage competition between retailers, in the spirit of capitalism, which last I check, Malaysia still supposedly runs on; where there is low demand/sales volume, retailers can retain the ceiling prices and drivers will still patronize their kiosk because no one wants to run on empty in the kampung where fuel kiosks are few and far between.

As a private car owner, I’m also not worried about my fuel expenditure fluctuating on a weekly basis. Previously, the pump prices would fluctuate between 10 to 20 cents a litre from month to month. Now, we can expect a change of 5 to 10 cents from week to week. So, with a 40-litre fuel tank, at worst the price of a full tank of petrol would increase by 4 ringgit the following week, and if that affects my short-term financial budgeting, I have bigger problems to worry about. If you ride a kapcai, the difference is even negligible. If you own a bigger car…well, if you can afford the car, you can afford the petrol.

I’m not worried that retailers would conspire to get as much of my money as possible, because there is something called the Competition Act 2010 (read it) that forbids price fixing.

What i AM worried about, which is the same everytime there’s hoo-ha over the price of fuel, is not how much I am paying at the pump, but how much I have to pay ELSEWHERE. I do not know yet how public transport operators (from buses to taxis to Grab/Uber) will react to this new system. I do not know yet if logistics providers, like the ones who deliver my daily supplies arrive to the supermarkets, would increase the price of their service and thus affect the price of my daily necessities, like food and household goods. So, it’s not the prices now displayed on big bright LED screens at the entrance of every petrol kiosk that worries me the most, it’s the prices of meat and veggies that only ever go up with the price of petrol but never come down.

image: Petrol Price Malaysia

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