What does the Finance Ministry mean by protecting consumers from global oil hikes?

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Finance Ministry's Role in Shielding Consumers from Global Oil Price Volatility

The Finance Ministry's statement regarding the protection of consumers from global oil price hikes refers to the government's deliberate intervention to maintain the retail prices of RON95 petrol and diesel below their actual market rates. This policy aims to cushion the immediate impact of fluctuations in international crude oil prices on the average Malaysian household. For the week of August 11 to 17, the retail price of RON97 petrol was set to decrease by 10 sen to RM4.40 per litre. In contrast, the prices for RON95 petrol and diesel were maintained at RM2.05 and RM2.15 per litre, respectively, despite their real market values having surpassed these capped figures.
Maintaining Subsidised Fuel Prices

The unchanged prices for RON95 and diesel are a direct result of government intervention to shield consumers from the full brunt of escalating global oil prices. The Ministry of Finance indicated that the real market prices for these fuels have indeed risen above the current ceiling prices set by the government. By keeping RON95 and diesel at RM2.05 and RM2.15 per litre, respectively, the ministry ensures that the cost of these essential fuels does not immediately reflect the increased international crude oil prices. This approach effectively absorbs the difference between the market price and the subsidised price, thereby mitigating the financial burden on consumers.
The Automatic Pricing Mechanism (APM)

The retail prices of petroleum products in Malaysia are determined weekly through the Automatic Pricing Mechanism (APM) formula. This mechanism calculates the prices based on the average of global crude oil prices, currency exchange rates, and other operational costs. However, the government's decision to keep RON95 and diesel prices constant, even when the APM formula indicates a higher market price, signifies a departure from a pure market-driven approach for these specific fuel types. This selective application of the APM highlights a policy choice to prioritise consumer affordability for these widely used fuels.
Government Monitoring and Welfare Measures

The government, through the Ministry of Finance, actively monitors global crude oil price trends to anticipate potential impacts on the domestic market. The commitment to taking "appropriate measures" indicates a proactive stance in managing fuel prices. This involves not only setting retail prices but also potentially providing financial support or subsidies to offset the difference between the market price and the capped price for RON95 and diesel. Such measures are implemented with the overarching goal of ensuring the continued welfare and well-being of the Malaysian populace, especially concerning the cost of essential transportation fuels.

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What does the Finance Ministry mean by protecting consumers from global oil hikes?

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