On 3rd Dec, 2014, gasoline was selling as low as US$1.98 in the United States. An Oncue Express station in Oklahoma City was selling the gasoline for US$1.99 a gallon, the first one to drop below US$2 in the U.S. since July 30, 2010. That was roughly about £1.27 or RM6.86 a gallon (3.785 litres). In terms of litre, that would be around £0.33 or RM1.81 every litre.

 

That was based on the exchange rate of roughly RM3.44 to a US dollar. The date was significant because the Malaysian government abolished its fuel subsidy hence the retail prices from Dec 1, 2014 onwards are using the managed float system. However, instead of enjoying RM1.81 a litre, Malaysians paid RM2.26 and RM2.46 a litre for RON-95 and RON-97 respectively.

Assuming other miscellaneous costs were constant, consumers were being milked at least RM0.46 for every litre of RON-95 (Regular gasoline in U.S.) in order to enrich Najib administration whose UMNO party rules the country. In other words, instead of assisting ordinary folks with fuel subsidy, the reverse happened whereby the people subsidize the federal government instead.

 

In 2013 alone, the federal government bitched, whined and cried about subsidizing RM29 billion (RM21 billion in 2014) to subsidise RON-95, diesel and liquefied petroleum gas. So, as the year comes to its end, Prime Minister Najib Razak has been relieved of RM29 billion in 2015. Not only the people fully paid for their gasoline, they were also forced into paying extra for UMNO.

But if you think that was worse, wait till you read this. As we wrote previously, the crude oil has started wrecking havoc before Christmas and fireworks could be unleashed for the New Year celebration. Brent crude futures slipped below US$38 a barrel for the first time since December 2008. It was last trading at $37.66 a barrel, down 4.5%.

On the other hand, WTI entered the US$35 territory for the first time since February 2009. It settled at $35.27 a barrel, down 3.1%, or US$1.14. WTI’s financial crisis low was US$32.40 in December 2008, whereas Brent could be testing June 2004 lows of US$34 a barrel. Both Brent and WTI crude tumbled despite data showing U.S. drillers cut the number of oil rigs, and that’s disturbing.

Based on our investigation, D Express Mart and L.S. Super Food (Oklahoma) are selling the cheapest gasoline in the U.S. now, at US$1.54 a gallon for Regular gas. That would translate to roughly about £1.01 or RM6.66 a gallon (3.785 litre), which in turn would be around £0.27 or RM1.76 every litre. So, will Najib regime drop the price of RON-95 by 19 sen from the present RM1.95 for January 2016?

 

But we’re talking about an exchange rate of RM4.327 to a dollar. Can you imagine the price of RON-95 today if PM Najib Razak hadn’t screwed up with his RM42 billion 1MDB and RM2.6 billion private donation scandals? If today’s exchange rate had remained at RM3.44 as of December last year, the fair price of RON-95 today should be RM5.30 a gallon or RM1.40 a litre.

Okay, perhaps Najib’s alleged corruption and money laundering aren’t the only reasons why Malaysian Ringgit the worst currency in the Asia region. But based on the 1-year chart of US dollar performance against other Asian currencies, the gap between the ringgit and the second worst performer – Indonesia Rupiah – was a whopping 11%.

 

Assuming ringgit has performed as badly as the often perceived “pariah” rupiah without the 1MDB and private donation scandals, the Malaysian currency would have had traded at about RM3.90 to a US dollar (11% depreciation due to Chinese Yuan devaluation). At the present US$1.54 a gallon gasoline, it would be translated into RM1.58 a litre for RON-95.

 

From US$110 a barrel to the current US$37 a barrel, that’s more than 66% cheaper crude oil we’re seeing today. During the same time period, the price of RON-95 changed from RM2.10 to RM1.95 a litre – a pathetic 7%. Clearly, besides losing RM29 billion from unsubsidized fuel, ignorant Malaysians have been happily donating more into Najib regime’s pocket.

 

Other Articles That May Interest You …

• Get Ready For A Second Round Of Chinese Yuan Devaluation
• Forget About US$30 Oil Price – It Could Hit US$20 Per Barrel Next Year
• Promotion!! – Prime Minister Najib Razak Is Now “Emperor” Najib Razak
• Flashback Of 1997 & Today’s Financial Crisis – Here’s Why You Should Be Scared
• BOOM!! Gasoline At US$1.98 A Gallon Or RM1.80 A Litre Now
• Are You Ready For Crazy Oil Prices At US$30 A Barrel?
• After China Steel Cheaper Than Cabbage, Now U.S. Gasoline Cheaper Than Milk
• Dollar Bull Run Could Wreck Havoc In Asia, Particularly Malaysia

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December 13th, 2015 by financetwitter

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