November 6, 2008

Are we paying the right price?

I've been busy for the past few weeks and no wonder there's not so much of update eh? Anyway, I've been following closely what was going on and Malaysia seems to be okay but there are some issues that boggled my mind.

The government has been asking the business owners, operators and distributors to reduce on the price due to the decrement of the petroleum price, globally, but not locally.

But is the government 'cakap serupa bikin'? As the global oil price stated, it's now way around USD70 per barrel, of when the local petrol and diesel price was increased back in July, the oil price was at USD147 per barrel. Our local RON97 price was increased from RM1.92 to RM2.70 and Diesel was increased from RM1.58 to RM2.58, plus a subsidy of RM0.30 per liter, that means the market price for the petrol is actually at RM3.00 per liter and RM2.88 per liter for diesel.

Last time, before oil price was increased, the market price for Diesel is RM1.58, whereas the diesel price for the industry, which is following the market price was sold at around RM2.70 per liter. There was a subsidy of more than a ringgit per liter.

It's clear now that the oil price has dropped more than half but our local petrol and diesel price has not dropped even 1/3 of the price. It is clear that we are actually paying more than the market price now. The non subsidized Diesel for Industry is sold at around RM1.20~RM1.30 as for the time being, of which the subsidized diesel is at RM2.05?

What is going on now? A source, who is driving the tanker truck for petronas (who asked not to be disclosed) also confirmed that, the manufacturers/factories started to order diesel in bulks to be sent to their business premises, as it has never happened before. All this while, the factories and manufacturers bought the subsidized diesel from the petrol station. Now they ordered it directly from Petronas, using the non-subsidized industry rate which is very much lower than the local market price.

I just would like to say that, our economic expert were so blind that they cannot see this to happen. All this while, what were they doing rather than being paid for not doing the right thing to forecast the economy situation?

I've also proven it right to my friend in RHB investment department that the oil price will drop to USD70. The bet is still on.

On the 17 and 18th last month, I went to Hanoi with my parents and my brother in law. I snapped some pictures and those can be viewed here

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