Malaysia unveils new plan to fix fuel prices: Petrol price floats from Sept 1 to reflect world crude price

Malaysia unveils new plan to fix fuel prices
Agence France-Presse - 8/1/2008 12:11 PM GMT
Malaysia will next month introduce a new system linking domestic fuel prices to the global market, but will cap prices at their current levels, Prime Minister Abdullah Ahmad Badawi said Friday.
Crude oil costs have fallen around 23 dollars since Malaysia introduced a 41-percent fuel price hike in June to ease the burden of spiralling energy subsidies, sparking angry street protests.
"The government would like to announce that effective September 1, 2008 the retail fuel price will be adjusted according to the monthly average, and the subsidy of 0.30 ringgit (per litre) will be maintained," Abdullah said in a statement Friday.
"The retail price of fuel will be fixed on the first day of every month."
An aide to the prime minister said that if global crude oil prices continued to ease, "then pump prices could be adjusted lower in September."
"The pump price of fuel at the beginning of each month, from September onwards, will reflect the average crude oil prices for the month before," he told AFP on condition of anonymity.
Oil was trading at around 123 dollars on Friday after being pushed lower on fears of easing energy demand. But prices are still much higher than in recent history, having traded at under 10 dollars in the late 1990s.
In June the government fixed pump prices at 2.70 ringgit per litre (0.83 dollars) based on crude oil prices of 125 dollars per barrel, and Abdullah said there would be no further hikes in 2008.
The government increased petrol prices to ease the burden of spiralling energy subsidies, but crude oil costs have fallen by about 23 dollars from record highs above 147 dollars per barrel, which hit earlier in July.
Malaysia's annual inflation rate soared to a 26-year high of nearly eight percent in June due to the rise in fuel costs, echoing a surge in inflation across Asia that has stoked fears of slower regional economic growth.