KINIGUIDE | The price of RON95 fuel and diesel in Malaysia has been placed on a managed float since Dec 1, 2014, following the discontinuation of government fuel subsidies.

Following the latest fuel price revision for the month of November however, there was an unusual uproar over the fuel prices.

The increase of 15 sen per litre for diesel, RON95, and RON97 fuels would mean fuel prices are at its highest point yet for the year 2016, even as crude oil prices had been falling towards the end of October.

Brent crude oil prices were US$49.06 per barrel at the end of September, but had fallen to US$48.30 by Oct 31 when the new prices were announced. The fall was particularly pronounced in the second half of October.

How are fuel prices calculated, and why didn’t prices at the pump come down with the falling crude oil prices?

In this instalment of KiniGuide, we look at the Automatic Pricing Mechanism (APM) and walk you through the calculations.

What is the APM?

The APM has been around since 1983. Since Dec 1 last year, the mechanism has been used to calculate RON97, RON95, and diesel prices since the discontinuation of fuel subsidies.

There are two main variables that affect the fuel price under APM, namely the Means of Platts Singapore (Mops) prices for these fuels, and the ringgit-US dollar exchange rate.

On top of these however, there are some fixed costs added to the final price...