Government to intervene if global oil prices rise too high

The Government will intervene if global crude oil prices rise too high to cushion the impact on RON95 petrol and diesel, said Deputy Finance Minister Datuk Chua Tee Yong.

“However, the intervention mechanism has not been finalised yet and the evaluation process undertaken by the Domestic Trade and Consumer Affairs Ministry is still ongoing,” he told a press conference after delivering his keynote address at the 19th Malaysian Capital Market Summit here yesterday.

Chua said the Government’s move to let market forces determine fuel prices via a managed float system was to let consumers enjoy the current downtrend in global oil prices.

The managed float mechanism, to commence on Dec 1 as announced last Friday, supercedes the Government’s initial plan for an income-tiered fuel subsidy.

“With the current low oil prices, not announcing the float means the Government has to impose tax on petrol. This is not what we want to achieve,” Chua said.

In making a comparison, he said neighbouring Indonesia had priced the lower grade RON88 petrol at RM2.35 a litre, while the premium RON92 and RON95 were at about RM2.70 and RM3.20 respectively – substantially higher than in Malaysia due to taxes.

He believed that in the short term, there should not be any increase in global oil prices given that the Organisation of Petroleum Exporting Countries had also not indicated any reduction in exports.

“We will continue to monitor these developments to ensure the floating of fuel prices will not be an extra burden to the people. The Government has allocated a subsidy budget of about RM37bil for next year.