News  |  Malaysia

People ready to face the inevitable, weekly fuel prices

People ready to face the inevitable, weekly fuel prices
Effective tomorrow, Malaysians will see fuel prices at the pumps set weekly and no longer monthly like what they have seen since December 2014.
KUALA LUMPUR: Effective tomorrow, Malaysians will see fuel prices at the pumps set weekly and no longer monthly like what they have seen since December 2014.

Therefore, the price revision, for petrol and diesel, will be made known by midnight each Wednesday and the new price, if there is a change, will become effective each Thursday. For the average consumer, the retail price of the fuel at the pump could be higher, lower or the same every Thursday depending on the world petroleum prices.

The weekly price mechanism is meant to further fine tune the monthly managed float system, especially looking at the fact the world fuel prices vary by the day. Hence, setting the prices on monthly basis may not accurately reflect on what the consumers are paying.


TWO SIDES OF A COIN

Elaborating on this, Federation of Malaysian Consumer Association's (Fomca) vice president Mohd Yusof Abdul Rahman noted the weekly price mechanism would reduce the price fluctuation range to between five sen and 10 sen per liter.

This is certainly better than the monthly price float mechanism that allowed the price fluctuations from 10 sen to 20 sen per liter.

Yet, whether the price is decided weekly or monthly, there may not be much difference for the average consumer as the price is set based on the world oil prices.
Hence, there is always this fear if the world oil prices is used as the benchmark in setting the retail prices, the unbridled rise in crude prices will definitely burden the consumers.

"What the average consumer wants to know is that how much they have to pay at the pump and whether the government will set a limit on how high it could go? If the government is just to announce the prices each week without any contingency plans if it goes too high, consumers will be left in a lurch.

"For example, the RON95 is already considered hefty at RM2.30 per liter and what more if it rises further. Therefore, the government has to put in place some controls if the increase goes beyond affordability. The government has to think of targeted subsidy for the middle and low income group," he said.

"In other nations like Singapore and Hong Kong, fuel price hike is no problem for the people there as they have a highly efficient public transport system and most of the people use it," he said to Bernama.

He added that though the fuel price there is high, the government provides subsidies for public transportation to ensure it becomes the main mode of transportation for the people.


POSITIVE IMPACT ON THE ECONOMY

Meanwhile, Senior lecturer at the School of Economy, Finance and Banking, Universiti Utara Malaysia (UUM), Muhammad Ridhuan Bos Abdullah noted the government's intervention and regulation would ensure efficient market operations and would benefit the national economy.

He also opined that the government has taken into account the impact of the previous mechanism (monthly pricing) before introducing the new mechanism (weekly pricing).

"The new mechanism is similar to the one implemented in several developed nations like in the United States and Canada that complies with the Federal Trade Commission (FTC) or the organisations that regulate the respective markets.

"We hope that any changes in the price will give the advantage to the government especially in the 'cost-saving' aspect and the cost saved passed to the consumers (industry and household). If there is a rise in the price of the fuel, we hope the government will be more flexible and take preemptive steps to absorb the price hike," he said.

On the possibility that the weekly prices will unleash stiff competition between petrol kiosk operators, Muhammad Ridhuan Bos pointed out the competition would benefit the consumers.

The petrol kiosk operators will roll out promotions for consumers with discounts for the fuel.

"However, it cannot be denied that there may be some price fixing or cartel emerging, but the Competition Act 2010 could prevent that," he said adding that the act works to promote economic development and create a competitive business environment.


COMPREHENSIVE STUDIES

Meanwhile, a public servant Mahathir Ahamad, 36, opined that the people have to be exposed sufficiently on the new mechanism to prevent them from being manipulated or cheated.

A private sector executive Mohd Fadly Daud, 39, opined that the weekly pricing was inappropriate as consumers have to keep up with the prices that change weekly.

"Its better to revise the prices ever six months. As consumers we fear that petrol kiosk operators or companies could manipulate the weekly pricing for their benefit especially that they know beforehand the impending price hikes," he said.

-- BERNAMA