New Formula For Fuel Prices to be announced next week

BATU KURAU (Perak): Domestic Trade, Cooperatives and Consumerism Minister, Datuk Seri Hamzah Zainuddin said a new formula to fix fuel prices will be announced next week.

The new formula to fix oil price is aimed to stabilize the oil industry. He added that the ministry would be holding a meeting with oil industry players next week to discuss the formula.  

“We sympathize with the petrol station operators who suffered losses when oil prices drop. They (petrol station operators) feel they are the victims (when prices drop),” he told reporters after attending a Ramadan function here Friday.  

He explained, adding that the ministry would ask the Government to assist fuel retailers that have been badly affected by the deviation in oil prices. Recently, the retail prices of petrol and diesel have been on a downward trend lately. The Petrol Dealers Association of Malaysia (PDAM) described the weekly price adjustments as “unhealthy,” and the cause of several station closures since its implementation.

Since April 1, the retail prices of RON95, RON 97 and diesel are set on a weekly basis which in on monthly basis before.


How Fuel Prices are calculated in Malaysia

Do you know how the fuel prices are calculated here, in our country? Are you familiar with the Automatic Pricing Mechanism (APM)? This is the method used in calculating the fuel’s price, which was implemented way back in the year 1983. The main purpose of its establishment is to stabilize and maintain the prices of petrol and diesel. It was done by including the variation in amount of sales tax and subsidy, so that the retail price will only change in situations in which the difference in prices exceed the threshold and limit of the tax and subsidy.

Many people are not aware of how APM works leading to an increase amount of complaints in regards to lack of understanding of the method. Some has already come out with explanation in trying to educate the public about the APM. One term that need to be understand as well is the Mean of Platts Singapore (MOPS). Again, what is it? MOPS is one type of swaps that is actually a future price. A buyer of a certain refined oil product will be referring to the MOPS index as a more reliable indicator of world prices instead of crude oil prices. Our country’s government is using the MOPS in order to determine the fuel prices as the MOPS price is typically more premium than the crude oil prices. Besides Malaysia, most of the ASEAN countries and Australia are using the MOPS as the base for their fuel prices. Platts is a McGraw-Hill company in Singapore that track, assess and update the index of MOPS based on the daily average of all the trading transactions between all the petroleum-based products’ buyer and seller.  

For the breakdown of the fuel price in Malaysia, the price of Alpha is fixed at 5 cents per litre for petrol and 4 cents per litre for diesel which act like a buffer for oil companies. For example, oil companies will need to bear the additional cost if they purchase a product that is higher than the price published by MOPS. Conversely, the companies will gain extra if they buy the product with a price lower than the MOPS published price. For operational cost which covers both the transport and marketing costs, they are set at 9.54 cents per litre for the Peninsular of Malaysia. For Sabah and Sarawak, they are set at 8.98 cents and 8.13 cents respectively.  

In regards to sales tax and subsidies, these are combined. Referring to the Sales Tax Act 1972, our government is allowed to collect maximum sales tax of 58.62 cents per litre for petrol and 19.64 cents per litre for diesel. Do take note that this is effective when the fixed retail price of the petrol and diesel is higher than the actual price at the pumps. Inversely, the government can pay a subsidy of the same range if the fixed retail price is lower than the actual cost of the petrol and diesel at the pumps. Expert says that the 30 cents maximum subsidy, as part of the improved APM is a way to stabilize the retail prices of the fuel. Thus, this allows the players in the industry to manage their expenditure and expenses in a more organized manner.

Crude oil falls 20% but will Malaysian Petrol be cheaper ?

Global crude oil price has dropped dramatically during the end of June plunging as much as 20% from $60 per barrel to $48 per barrel as of end of July. There are several factors that caused the reduced demand for oil.

crude oil

The Iran Nuclear Deal was reached where sanctions on Iran oil and gas sector is expected to be lifted and the world is expected to have more supplies of oil. The crash in China stock market, Greece issues and world economy uncertainties and recently the fall of Gold and commodities price have also reduced the demand for the black gold.

Floating Price Mechanism

Malaysian has effectively removed it’s fuel subsidy at the end of 2014 as part of government effort’s on subsidy rationalization program. The pump price are set of floating mechanism where it will be adjusted on monthly basis based on the global oil price.

Prices for Ron 97, Ron 95 and Diesel has increased substantially over the past few months however will the price be adjusted with the recent slump in global oil price? Malaysians will just have to wait until the midnight of August to know the next price for fuels.


No more early news for petrol price

According to Minister of Domestic Trade Cooperative and Consumerism ,Datuk Seri Hasan Malek the government will stop announcing petrol price to the public before midnight at the end of month but instead the price will only be released after midnight at the start of the month. This move is taken to prevent congestion and disruptions when motorist rushed to fill up petrol at the last minute which usually leads to out of petrol situation.  The ministry will be sending the latest price directly to the petrol dealer instead. The Petrol Dealer Association of Malaysia (PDAM) has welcomed the move as they have requested the government to do so.

Malaysians will not be able to know the official petrol price but instead will only know the price at the early month.  During the month of June, Malaysians are officially paying RM 2.05 per liter for Ron 95, RM 2.35 per liter for Ron 95 while RM 2.05 per liter for Diesel.

Petrol Price expected to rise on March 2015


Petrol Price is speculated to increase on midnight 12:01am 1st March 2015 although Domestic Trade Cooperative and Consumerism Minister Datuk Seri Hasan did not specifically mention on the price increment.  It has been widely believe that the price of petrol will increase by 10 to 20 cents as of March 2015. The international oil prices has rose to 60 USD per barrel for Brent crude oil and 50 USD per barrel for WTI for the month of February. The new price for Ron 95, Ron 97 and Diesel will be announced on 12:05 am tonight.

Petrol Price Reduction February 1st 2015

The Ministry of Domestic Trade, Co-operatives and Consumerism has announced that petrol price will be reduced in Malaysia following the floating mechanism that is based on international oil price. The news was also shared by Deputy Finance Minister Datuk Ahmad Maslan on his Twitter account.  The Ron 95 shall be reduced  by 21 cents, Ron 97  by 11 cents and Diesel by 23 cents. With the following adjustments, the new price for Ron 95 will be at RM 1.70 per litre, Ron 97 at RM 2 per litre and Diesel at RM 1.70 per litre.

Petrol Dealers Association has also voiced concern on the petrol price reduction as it will hurt their profit.  According to it’s president Datuk Hashim Othman, any price reduction will have serious impact on petrol dealers.

The new price will be effective starting 1st of February 2015. Like to follow the latest petrol price in Malaysia.


Ron 95 vs Ron 97

What most of us know about RON 95 and RON 97 is that RON 97 is more expensive than RON 95. Since the recent reduction in the price of RON 97 on 1st of December 2014, the price difference between RON 97 and RON 95 is quite low – about 20 cents difference.  But still RM1 every 5 liters can add up at the end of the day. The price reduction of RON 97 has increased the demand for RON 97 and more and more people have been using it, but does it really do anything for engine performance? Maybe you’ve had some ‘mamak’ conversations about RON 95 and RON 97 – about whether it actually increases engine performance and whether it’s worth the price to pay more for. But before we start the factual comparisons of RON 95 and RON 97, let’s firstly be clear about RON – what is it and what does it stand for? RON is an abbreviation for Research Octane Number and is basically a measure of the quality and performance of the fuel.  RON is calculated by measuring a fuel’s knocking resistance in spark-ignition internal combustion engines. Knocking is what happens before the flame from the spark plug reaches the air-fuel mixture and ignites prematurely. Premature ignition can cause a decrease in performance and might also harm the engine.The higher the RON, the better the fuel’s knocking resistance and the fuel’s ability to delay auto ignition.


So which fuel should you use – RON 95 or RON 97. First of all, you should consider the vehicle you are driving. Check your vehicle’s service manual for the minimum RON rating that it requires. If your engine requires a minimum of RON 95, you might as well use RON 95 as it is cheaper than RON 97. Using RON 97 on a vehicle that only requires RON 95 is a waste of money as it hardly increases engine performance.However, if your engine requires a minimum of RON 97, then be ready to pay a little more  for fuel because filling your engine with a lower RON than the one specified might lead to premature ignition which can damage your engine in the long-run and in the worst case scenario, result in an explosion. Generally, cars with higher performance engines or engine capacity above 2400cc use RON 97. Most cars in Malaysia are built to run on RON 95. Some newer high compression engines also run on RON 95.

Contrary to popular belief, RON 97 does not make your engine perform better; rather it actually makes fuel burn less easily. RON simply refers to the ability of the fuel to resist knocking and delay auto ignition. Some may argue that the engine oil in vehicles using RON 97 stays cleaner longer as a result of the combustion generating lower heat. But actually RON 97 stays cleaner longer because of the detergents used and has nothing to do with the combustion rating.

Another common misperception about RON 97 is that it gives you more mileage than RON 95. In fact, the amount of mileage you get has to do more with how you handle your vehicle and the traffic conditions.


Here is a comparison of the RON 97 and RON 95 prices from late 2013 to late 2014.

Date Price of RON 97 per liter Price of RON 95 perliter
September 2013 RM2.85 RM2.10
January 2014 RM2.80 RM2.10
March 2014 RM2.90 RM2.10
October 2014 RM2.75 RM2.30
November 2014 RM2.55 RM2.30
December 2014 RM2.46 RM2.26


In conclusion, a higher price doesn’t always mean better quality per se. In this case, it very much depends on the requirements of your vehicle. The rest is just marketing. Now tap yourself on the back for reading this article and minding your wallet, it takes effort, but ignorance is not bliss

Ron 95 and Ron 97 to go down by 35 cents, Diesel 30 cents

petrol price

The government has confirmed that Ron 95 and Ron 97 to go down by 35 cents ,while Diesel 30 cents as of January 2015. The Ron 95 will be priced at RM 1.91 per litre, Ron 97 will be priced at RM 2.11 per litre while Diesel will be priced at RM 1.93 per litre.

According to Minister Datuk Seri Hasan Malek, the price of petrol will continuously be monitored and adjusted as per implementation of fuel floating mechanism that effectively removes all petrol subsidy on December 2014.


Formula to calculate Ron 95 and Diesel price to be revealed

hassan malekDomestic Trade, Cooperative and Consumerism Minister Hasan Malek announced recently announced that the formula to calculate Ron 95 and Diesel prices will be revealed to the public soon. The ministry is currently seeking approval from the Ministry of Finance for the simplified version of the formula to be made public on the ministry website. The calculation of the fuel price is complex however it would be better for public to understand it.

Currently Malaysian Fuel price is calculated based on APM (Automatic pricing mechanism). The calculation method has been in place since early 1980s and is being used to stabilise fuel prices in Malaysia. The ministry has also added that the calculation for Ron 95 and diesel will be slightly different as fuel subsidy for Ron 95 and Diesel has been removed. Certain quarters have also questioned whether sales tax was imposed to the Ron 95 fule.

On 1st of December, Malaysian Government has effectively removed all fuel subsidy on Ron 95 and Diesel fuel in Malaysia .The recent Diesel price increment has sparked questions as the Global Crude Oil price continues to fall. While the prices on Ron 95 has fallen, many consumer has opted for Ron 95 instead as the price different between these two fuel are not hight. This has caused major Ron 97 petrol shortage on all the pump across Malaysia. The government has reiterate and increased the supply of Ron 97 fuel to address this issue.


Ron 95 and Ron 97 price down while Diesel prices to go up

The prices of Ron 95 and Ron 97 will be going down effectively 12:00 am 1st of December 2014. Ron 95 will be going down four cents while Ron 97 will be going down nine cents.The new Ron 95 will be priced at RM 2.26 per litre while Ron 97 will be priced at RM 2.45 per litre.  Prices of diesel however will be going up three cents to RM 2.23 per litre.

Domestic Trade, Cooperative and Consumerism Minister Hasan Malek announced that the price will be valid as of December 2014. There will also be a monthly announcement on new fuel prices as Malaysians will be adjusted to new petrol floating prices as of December 2014 where all fuel subsidies are removed. With the new floating mechanism, fuel prices are bound to rise and fall depending on global crude oil prices. The system will be based on the Ron 97 floating mechanism where subsidy for the fuel was removed as early as 2010. Foreign exchange rate especially conversion between Ringgit and US Dollars will also be taken into account and this will also effect the fuel prices in Malaysia.

Minister Hasan Malek has also urged all petrol stations and oil company to follow the latest retail price set by the ministry. Actions can be taken by the Government to whoever that failed to do so under the Supply Control Act 1961. The Government has previously announced on November that fuel subsidy in Malaysia will be removed.

Globally, the fuel price has dropped significantly since a few months ago. Global crude oil has dropped to 66 USD per barrel which is one of the lowest price in 4 years time when OPEC decided to maintains production target.