How do refined oil prices influence local petrol costs?

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Refined Oil Prices Directly Dictate Local Petrol Costs Through a Managed Float System

Local petrol costs are determined by the global prices of refined oil, not crude oil, through a managed float system underpinned by the Automated Pricing Mechanism (APM). This system allows retail prices to fluctuate in line with international market movements, incorporating various cost components beyond the raw refined product. For instance, the APM for RON95 includes specific charges such as a five sen 'Alpha' for price variations, 9.54 sen for transportation and marketing, a 5 sen margin for oil companies, and a 12.19 sen margin for petrol stations.
The Managed Float System and APM Ensure Price Alignment

The managed float system, in conjunction with the APM, is designed to ensure that local petrol prices reflect global trends in refined petrol. This mechanism, in place since April 1983 for RON95, accounts for the entire supply chain. For example, the APM price for January 2017 was calculated at RM2.19 per litre, which was 9 sen higher than the actual pump price of RM2.10 that month, indicating an adjustment within the system.
Global Refined Oil Pricing is Determined by Mean of Platts Singapore (MOPS)

The benchmark for refined oil prices used in the pricing mechanism is typically derived from the Mean of Platts Singapore (MOPS). This assessment system tracks the pricing of petrol and diesel. For instance, a MOPS95 average price of US$66.55 per barrel in December 2016, when converted using an exchange rate of US$1 to RM4.4599, contributed to the pricing calculations for the subsequent month.
APM Balances Fluctuations for Consumers and Industry

The APM incorporates specific margins and costs to ensure stability and fairness across the supply chain. In February 2017, the APM price was RM2.262 per litre, which was 3.8 sen lower than the pump price of RM2.30. This demonstrates how the system can absorb or pass on global price changes while maintaining a degree of moderation, preventing drastic monthly price jumps. Without this managed float, RON95 prices could have increased by a more significant margin, as seen in potential jumps of 30 sen or 10 sen between months if the system were not in place.

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How do refined oil prices influence local petrol costs?

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