While we are suffering, the government is happily making bucket loads of money

Recently the government have announced a reduction of petrol price. Should we be really happy about it? Let us look at some simple mathematical calculation that the Finance Minister cannot seem to do.

I will just look at petrol price not diesel as diesel price is an entire different calculation.

When the government announced the price hike to RM 2.70, price of crude oil is around USD 140.00 And the government is still subsidizing RM 0.30. So the actual price of petrol per liter is RM 3.00.

Recently there is an announcement of the fuel reduction from RM 2.70 to RM 2.55 with a difference of RM 0.15. Global oil price is now around USD 115.00.

Take USD 140 - USD 115 = USD 25.00
Percentage difference is 17.8% (rounded down)

So we should really be getting a petrol price base on a discount of 17.8% of RM3.00 (I want to be fair in this calculation). This comes to RM 2.466 which is really lower than our RM 2.55 now. So the government is actually making an extra RM 0.08 (rounded down again!). And no more subsidy!

According to CIA factbook, the Malaysian consumption of oil is 501,000 barrels per day in a year 2005 estimate. The figure will actually be more now but let us stick to this number. 1 barrel has 42 gallons of crude oil and after processing it will yield 19.6 gallons of petrol. This is equivalent to 73 liter (rounded down).

So one day alone the petrol consumption is 501,000 x 73 = 36,573,000 liters.

How much extra money a day the government is making?
36,573,000 x RM 0.08 = RM 2,925,840 a day. Let us round down to RM 2.9 million.

Today is Thrusday. The price lowering took effect on Saturday. That is 6 days and the government already made 6 x RM 2.9 million = RM 17.4 million. We still have to wait for 2 weeks before any change to the petrol price is made so 14 x Rm 2.9 = RM 40.6 million.

However, the price of crude oil was around USD 115 since 11th August. And it has been 12 days since last Saturday. So let us do another calculation.

We are charged at RM 2.70. The subsidy is removed since it is no longer subsidised.

So the government is making RM 2.70 - RM 2.466 = RM 0.23 (rounded down).

Total money made a day is 36,573,000 x RM 0.23 = RM 8.4 million (rounded down).

In 12 days they made 12 x RM 8.4 million = 100.8 million.

While we wait for the price to decrease to an appropriate figure, the government has already made RM 17.4 milling + RM 40.6 million + RM 100.8 million = 158.8 million.

Yes. And let us not forget when the price went down since mid of July (around USD 120). The money made during that time was not calculated in there. So easily the government could have made RM 200 million within the span of one and half months. Oh yes, and the figures were rounded down.

Now we know why the government still does not want to lower the price of petrol. A lot of money to be made from this. If the price of crude oil averages around USD 115 for the next month and we are still stuck with the current price, then the government will be making RM 87 million every month.

I am not against the government making money. As a matter of fact I encourage it but the profit from the petrol seems to be too much for the people of the country now. And this calculation have not included diesel yet.

What do you think?