Tuesday, October 21, 2008

Gasoline price comparison - Malaysiakini

Dear Rai,

Thank you for commenting in my blog. I greatly appreciate your feedback.

Thank you also for the link to the EIA website that provides the average price of gasoline throughout a certain week.

I understand also that this website works on the average price of gasoline throughout the week (7-day average) but I would also like to highlight to you that there's also another website that I refer to for average prices but on a daily basis and is regularly updated on a daily basis.

I would like to answer why I prefer to choose the lowest available price to make comparisons with our local gas prices.

First, our local market price of gasoline is claimed to be SUBSIDIZED. It is understood that our gasoline is tax-free. Then it is also made known that the average cost per litre inclusive of refinery, transportation and etc come to about 32 sen per litre.

However, different states in America imposes different amount of taxes and that being a free market, it is open to market competition.

Next, as we know, Malaysia is an exporter while America is an importer and hence, we can assume that America is not enjoying a privileged position like Malaysia (as in other oil exporting nations).

Hence, being open market in nature, even the gas station that sells gasoline cheaply is assumed to be making a profit. And if such a gas station sells gasoline that is taxed and unsubsidized cheaper than our non-taxed and subsidized gasoline, it raises a stink, or two.

We therefore need not go through extensively to argue about the amount of taxes imposed in different states in America to attempt to derive at an answer as to which price best suits comparison to Malaysian gasoline price.

The bare fact is that, taxed and non-subsidized, Flying J gas station located in Oklahoma City sells Regular RN92 at the cheapest possible price, at USD2.13 per gallon or RM1.97 per litre.

Of course, most people may also want to compare our gas prices to other oil producing nations and still find that our prices are still much higher, correct? But if I were to use a figure from a free market like America, a pump price that is taxed and non-subsidized, don't you think it bears more weight?

I doubt if anyone but the Finance Minister and his ministry know how prices of gasoline is tabulated. It is to be a secret. 

The same as in America where different state imposes different taxes, the same is with nations globally. As Aussie gomen said, 'establishing the price of petrol is no simple matter and it is not one that can be summed up in a simple one-line statements'.

Shell Singapore atempts to answer most of the questions but still, it is not conclusive. Economic, political and transportation, one can't deny that Singapore is a tiny island whereby if the gomen doesn't control the amount of vehicles on the road, it will be choked to the extent that its economy may be paralysed. Hence, taxes could no doubt be high in Singapore.

However, there is something similar to GasBuddy in Singapore. GasBuddy is America's gasoline price watch as is PW. Last updated on 16/10/08, RON92 is at $1.813 per litre.

I simply have no answer how gasoline prices are arrived at but our Finance Ministry not being transparent about it doesn't help either.

They say we must compare apple to apple but doing that, comparing oil exporting nation to another oil exporting nation, our gasoline price is the highest.

Comparing apple to orange, an oil exporting nation whereby gasoline is tax-free and subsidized against a free market oil-importing nation, I'm thrown off my chair when our gasoline prices are higher!

So please correct me if I'm wrong to say that Regular RON92 that's sold at RM1.97 litre at Flying J gas station located in Oklahoma City is TAXED and NON-SUBSIDIZED. 

Strange, huh? I simply can't comprehend how Flying J gas station is able to sell Regular RON92 at a cheaper price compared any gas station in Malaysia.

I hope you would understand now why I picked and will continue to pick the lowest price of Regular RON92 available on American soil to do comparison. 

Beating around the bush, again I repeat that if comparing apple for apple, comparing prices of oil exporting nations, we are shamed. Roundabout in circle, comparing apple for orange, as I had done, someone up there knows no shame!

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