More than 90% of RON 97 users have switched to RON 95 amidst rising fuel prices

Luxury car owners are also feeling the pinch of soaring fuel prices as more than 90 percent of vehicle owners who regularly used RON 97 petrol has switched to RON 95.

During an interview with Free Malaysia Today (FMT) Business, Petrol Dealers Association Malaysia president Khairul Annuar Aziz said most petrol dealers were selling over 2,000 litres of RON 97 just a month previously, however, currently, they are only selling just 200 litres.

FMT reports that the switch is inevitable as fuel prices have risen sharply in recent months. At the start of 2022, crude oil prices were recorded at USD 74 per barrel, by March, the price has risen to USD 120.07.

Though oil prices experienced a slight dip back to just over USD 90 on 16-March-2022, prices shot back up to USD 119.69 on 8-June-2022. The average price per barrel this year is USD 113 compared with USD 70.68 last year.

Various factors caused the steep climb in fuel prices, one of which is the Russian invasion of Ukraine.

In Malaysia, oil prices from 23- to 29-June rose to RM 4.84. In contrast, the price per litre of the subsidised RON 95 is RM 2.05.

Also read: Finance Minister: There are still enough funds to continue fuel subsidy

Khairul told FMT Business that the government is currently underwriting the cost of subsidy for about 20 billion litres of fuel a year.

In another interview with FMT Business, Sunway University’s Yeah Kim Leng said that the government will incur an exorbitant amount in subsidy payment as a result of the shift by consumers.

While he agrees that targeted subsidies should be introduced in place of blanket subsidies, he suggested that the government should start by adjusting the price of RON 95 rather than maintaining it at the current price.

He explains that adjusting the price of RON 95 can help reduce the subsidy burden given that the Ukraine crisis and its adverse impact on oil prices are unlikely to ease anytime soon.

Other than that, he also pointed out that the strengthening US dollar would also put more pressure on oil prices as well as other essentials such as food.

Also read: At RM 37.3 bil, Malaysia spends more on fuel subsidies than healthcare