Why has diesel price gone up when world oil price has gone down?
With world crude prices having fallen about 40 % for the last few months and amid calls that the government should reduce RON 95 and diesel pump prices, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek has recently announced that the retail price for RON95 petrol and diesel will be fixed on a managed float system from Dec 1.
The public have naturally expected that with the fall in world crude oil prices, they will enjoy lower petrol and diesel prices under the managed float system.
But Malaysians were shocked by the new prices which take effect today because, firstly, the decrease for RON 95 was only 4 sen and secondly, there was an increase of 3 sen for diesel price.
How is it possible that when world crude oil has been falling and when petrol price can go downwards that diesel is going up instead?
The government certainly owes the public an explanation.
But what Malaysians see today that the system has greatly benefited the government rather than the public, despite the downward trend of world oil price for the last few months.
With the implementation of the managed float system, the fuel subsidy from government will be abolished. This means that the government will save billions of ringgit annually.
While the government has benefited, Malaysians are going to face higher costs of goods due to the chain effect caused by the increased diesel price.
It is a matter of time that world oil price will rebound and without government subsidy, prices for RON 95 and diesel are going to rise under the managed float system.
The government must therefore give an undertaking that when oil price goes up, subsidy must be reintroduced so as not to burden the people.