Float petrol prices at pump but abolish intra-state tolls

The Perikatan Nasional government should float petrol prices at pump but abolish daily commute highways such as LITRAK, LDP, NPE, LKSA etc.

Global oil prices are currently low, and this provides an opportunity to float petrol prices by abolishing the Automatic Pricing Mechanism (APM) so Putrajaya would neither subsidise nor tax petrol anymore.

Petrol price controls are largely enjoyed by higher-income drivers while daily commute highways hurt the lower-income drivers the most. In 2019, Pakatan Harapan (PH) had spent about RM6 billion to cap petrol prices which merely subsidises the petroleum companies’ profits enjoyed by large engine cars.

The APM also allows government to impose a “hidden petrol tax” on us when prices are low which is extremely undemocratic. However, the government must control the petrol supply industry which is an oligopoly of 6 corporations supplying to nearly all retail petrol stations.

The weekly price review based on MOPS boosts petroleum companies’ profits. Indirectly, the government is floating petrol prices on a weekly basis at the supplier stage but regulating prices at petrol stations. Thus, profits from petrol sales are disproportionately consolidated within the hands of petroleum corporations.

The biggest financial beneficiary from APM is the government itself through Petronas and BHP (LTAT) which hold a market share of 41% as of 2017. The government should NOT be profiteering through state capitalism at the expense of the common people.

By right it should the other way around. There is strong competition at retail level (3500+ petrol stations) compared to petrol suppliers (6 petrol supplier companies). Floating at the pump will improve cash-strapped petrol stations’ margins. Currently, most petrol stations are poorly maintained while employing undocumented and underpaid migrant workers.

Subsequently, Perikatan Nasional should abolish daily commute highways and scrap any proposed new highways within Selangor to bring down the cost of living.

Most low to middle income Selangorians stay far away from their workplaces due to lack of affordable housing in the city. Statistically, working-class Malaysians are spending disproportionately more for tolls than their higher income employers to come to work.

Abolishing the highways allows city council to integrate the highways by introducing transit buses, pedestrian crossings, walkways etc. Abolishing the highways will reduce petrol-consuming congestion at toll gates and reduce the number of cars driving into housing areas to avoid paying tolls.

Written by:

National Coordinator
Bureau for Environment & Climate Crisis
Parti Sosialis Malaysia (PSM)
State Secretary
Parti Sosialis Malaysia (PSM Melaka)

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