O'Mighty Capital Articles Archive
Our Petrol Prices Being Rigged by Government?
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With the recent rise in fuel prices albeit the whole world talking about major drop in crude. The chatter came onto social media saying that the government is rigging our petrol prices which makes it rise more than what it should.
Our analysis from historical data might disappoint you that it isn’t rigged. The chart below shows the plot from our expectation vs government determined pump prices.
As you can see from the plot, the variation was huge when the pump prices were determined monthly but the chart narrow its differences when the weekly mechanism came into place. The chart below shows RON95 determined by the government versus Brent instead.
Looks like the culprit is still our currency where Singapore Dollars are just getting stronger day by day. Our fuel prices are still determined using Mean of Platts denominated in SGD rather than USD. Just a quick disclaimer, our expected RON95 computed might have some discrepancies as we take our prices from Brent rather than Mean of Platts.
So remember this from now on, the pump prices are heavily pulled by the currency value and it gets worse if the economy of Singapore goes back to normal from their current slow growth.
Expected RON95 is calculated by using:-
RON95 price (last month) + (Brent price changes) + (Exchange rate changes)
= Expected Price for following month
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Discussions
Be the first to like this. Showing 8 of 8 comments
Not sure why Singapore Dollar currency is used instead of US Dollar. Look at these facts (from April-Sept 2017):
1. On 20 April 2017 Ron95 was RM2.27 (highest price). The brent price was US$55.89 and S$1 was RM 3.1555.
2. On 29 June 2017 Ron95 was RM1.89 (lowest price). The brent price was US$45.22 and S$1 was RM 3.0833.
3. Now Ron95 RM 2.2 while brent price is US$52.38 and S$1 is RM 3.1487 (Estimated RON95 should be only RM 2.05).
As long as the government not being transparent about the calculation, I will suspect the price being rigged.
2017-09-08 12:07
Because over here in SEA we use the pricing from Tapis which is denominated in SGD under the Mean of Platts Singapore
2017-09-08 13:48
ABCnewbie we realize you cannot just take point to point on currency or Brent price because they use average
2017-09-08 13:50
omightycap: Noted. However I used conjecture (believe you also the same) when calculating the price since we do not have the "correct" equation. We will continue arguing and cannot get it right.
P.S: I support government policy that the petrol price should not be subsidized but it should be liberalized instead of "fixed". Let the oil companies determined their own selling price daily.
2017-09-08 16:16
ya indeed we lack a few variables like margins, crack spreads, etc. But this was meant to prove that we arent being taken for a ride
2017-09-08 17:17
Based on my data for August and compare it with April to July, clearly the manipulation occurs (statistically not possible to justify increase). Not sure about yours.. Why only August? And guess what, the worst increase is in first week of Sept. See below my data:
3 Aug - RM 2.03 (Actual RM 2.07)
10 Aug - RM 2.05 (Actual RM 2.12)
17 Aug - RM 2.06 (Actual RM 2.15)
24 Aug - RM 2.03 (Actual RM 2.15)
31 Aug - RM 2.06 (Actual RM 2.16)
7 Sept - RM 2.06 (Actual RM 2.20)
Coincidence with 1MDB perhaps?
2017-09-08 17:37
We felt that there were manipulation during the 2 Raya weeks when people balik kampung. In our data, we recorded a rise but it did not. The weeks following Raya sees it rising when our expected says it shouldn't. Another period was during by election where again it shouldn't rise.
Our FB used to draw out estimates up till one stage the prices went haywire and we stopped. It was working fine until one of the by election.
2017-09-08 19:34
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