Fuel Subsidies in Malaysia vs Global Crude Oil Prices, 2006-2012

loading Source: Ministry of Finance, Malaysia; Opec. Note: 2012e – estimated price/subsidies for year 2012

The Malaysian fuel subsidies bill is highly dependent on global crude oil prices. In other words, when the global crude oil prices increase, our government has to pay higher subsidies to keep gasoline and other petroleum products at the constant affordable price. As illustrated here, total subsidies move in tandem in with the Organization of Petroleum Exporting Countries’s (Opec) yearly basket price, which is a price index composed by the main Opec countries. Opec basket price is an important benchmark for oil prices, besides West Texas Intermediate (WTI) crude oil prices and Brent Crude Price in Europe. 

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