Saturday, October 4, 2008

Gasoline prices - Malaysiakini

There are many arguments as to how pump prices of fuel are derived. Sadly, I'm afraid nobody can give a correct formula and can only do some rough guessing.

The formula in calculating our pump prices of fuel is considered a priviledged secret and could probably be protected under OSA. Beats me, I wonder why the need for such secrecy when such a simple thing should be made transparent.

Take a look at the widget on the right. The quoted gasoline prices per gallon are ex-refinery. Therfore, we can conclude that the gasoline is engine-ready. Next, different states in the United States imposes different amount of taxes. Finally, we would need to add transportation and commissions.

Let's toy with some figures again. We shall take a similar product that's available in Malaysia and that would be RON 92 (regular).

Ex-refinery, US2.61 per gallon. Each US gallon equals 3.785 litres.

US2.61 / 3.785 = US0.689 per litre, convert to Ringgit, US0.689 X 3.40 = RM2.34 per litre

So, ok. We can somehow conclude that the ex-refinery price of Regular grade gasoline (RON92) is RM2.34 per litre.

The cheapest gasoline in the US today could possibly be found in Kansas City, at US2.85 per US Gallon. There's a website called and you would be able to view prices of gasoline across the US and Canada, with prices updated on a regular basis and sometimes the update can be as often as twice a day!

Picking the lowest available gasoline at US2.85 per US Gallon, pump price, we can somehow make a rough estimate that taxes, transportation and commission come to;

US2.85 - US2.61 = US0.24. This of course, is again an assumption.

Now, let's get further. Using this same price of Regular Grade gasoline (RON92), we try to convert to Ringgit per litre.

US2.85 / 3.785 X RM3.40 = RM2.56 per litre.

Aha! Maybe now we're getting somewhere. At 7-Eleven, Kansas City East, Friday 11.45am, the price of Regular grade RON92 gasoline, UNSUBSIDISED, is at RM2.56 per litre.

How about the price of subsidised Regular Grade RON92, pump price, in Malaysia? RM2.30

What's the difference between subsidised and unsubsidised Regular Grade RON92, the price difference between an oil importing nation and and oil exporting nation?

Well, a meagre 26 sen! And that, our UMNO gomen tells us that they are subsidising 33 sen per litre!

And oh, see the mess in Kuala Lumpur lately? Gas station running dry on fuel? Why so?


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