Petrol price in Malaysia: Analysis and calculation
Tired of waiting for the news regarding the fuel price every week? Disappointed that you can't plan your monthly expenses due to the ever-changing fuel price? What if I tell you that you can predict the fuel price on your own? Now you can save your money and your time!
This project study and analysis the formula and methodology that used in the estimation of new petrol price for next week in Malaysia. The study is important for petrol consumer to decide the timing of petrol purchase. While the study may only save the customer for few Ringgits in each pumping, it is a huge concern for petrol station owner, which a different of 10sen may wipe out their entire month of profit if they forecast wrongly.
After study the Malaysia monthly petrol historical price for last two years, the prediction is more accurately by using the Premium/ Refined oil price, data from MOPS (Means of Platts Singapore), compared to data of crude unrefined oil. The formula for our managed float system can be simplified with three major variables as below:
New Petrol Price = PS x UM + FM
PS = Refined oil price, 1 week, in USD unit.
UM = average of USD/ MYR, conversion of USD into Ringgit, 1 week
FM = Fixed Cost, usually around 22 to 55 sen. The value of FM is unlikely to change in short-term, it consists of components such as operation/ transportation cost, the profit margin in the petrol station, constant tax, in Ringgit unit. More info below.
Value for PS depends on the type of fuel, namely RON95, RON97 and diesel. The value is extracted from MOGAS95, MOGAS97 and GASOIL derivative products. As this derivative product is in barrel unit, the value had to divide by 159, as 1 barrel equal to 159 litres.
The data used in the calculation were derived mainly from NYMEX Singapore Mogas Platts and BNM Statistic Exchange Rate (USD versus MYR). For higher accuracy, the crude price used in the calculation was a combination of spot, the second and third month in the future price. This is important due to the oil price tends to be volatile when approaching month-end as the volume shrinks.
Many misunderstood that the pump price follows only the fluctuation of crude oil price, in fact government use Automatic Pricing Mechanism (APM) system and Means of Platts Singapore (MOPS) to calculate the pump price. MOPS price is affected by crude oil price, logistics, refining and other costs. Note that crude oil price is just one of the several components that affects the MOPS price, although these two will usually move in the similar direction (ie up or down), but they won't be on the identical path, because MOPS were affected by other costs while crude oil is not.
On top of that, let's not forget that the government has the right to impose tax on petrol for up to 59 sen, and diesel for up to 40 sen. Although currently government do not tax both the petrol and diesel (except Ron97), but one should that they can impose the tax on the petrol and diesel if they want to, and this is not something that we can predict.
Fixed margin components of petrol and diesel price
|MOPS Average||market rates||market rates|
|Oil Companies' margin||5||2.25|
|Fuel retailers' margin||12.19||7|
- Alpha: difference in price between the MOPS wholesale price transacted by oil companies and refineries.
- Operational cost: transport and marketing costs were the same for both petrol and diesel.
- Oil companies' margin: revenue margin for oil companies set by the government, all oil companies will have the same revenue margin.
- Fuel retailers' margin: what the operators of petrol stations earn for each litre of fuel sold. Same for all petrol station operators in the country.
On top of that, Ron97 is charging around 20sen of tax, while Ron95 and Diesel are not.