Tuesday, October 28, 2008

It's Time For A Cheaper Oil?

With world market in turmoil, where stock markets are heading no way but to the south and heading into doom, there is some good news nevertheless. The oil price has cracked down to a low level again. Probably due to the fear of lower in demand for oil due to economy recession, strengthening of US Dollar and lack in confidence over the global economy, the price of a barrel of oil is also going down. In fact, the oil price is now at 17-months low of barely on the ground of US$ 6o per barrel.

Pretty much a reference from a post on August...here

OIL PRICE on Monday - US$ 63.22,
RINGGIT vs US DOLLAR - US$ 1 = RM 3.61
1 BARREL of OIL = 159 litres of oil
(all resources from Yahoo!)

Therefore you have, RM228.22 per barrel/159 litres
So you have the production cost of RM 1.4354 per litre

Then, we have other things that also involved in it that we called
THE OTHER COSTS = Transportation + Storage + Commission + Miscellaneous
In Malaysia, the "Other Costs" = RM 0.32

Therefore, the oil price in a petrol station is
The price at pump is RM 1.7554

But, the government is so generous to subsidy 30 cents for each litre
YOU PAY = RM 1.4554!! way way cheaper than now!!

But in the recent announcement, the government decided not to reduced the oil price exceeding 15 cents to avoid sudden major loss in petrol station or kiosk owners. Then, it was announced the price will be lowered pending on the discussion by the cabinet. See, simply another act of flip-flopping. Consumers deserve a lower oil price if the global market price is in decrease.

RM 1.45 is way cheaper than the time when drastic measure to raise up till RM 2.70 back in June. That move is simply illogical if you think back now, don't there? So, where's my money?

1 comment:

Johnny Ong said...

i have blogged abt this with more datas - http://johnny-ong.blogspot.com/2008/05/is-malaysias-fuel-price-cheaper.html

will have more info by t'row (if available time permits)

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