Cover Story: International gas prices crash, but local price stays

IN March and April, Malaysians paid very low prices for petrol due to the epic crash in oil price as the Covid-19 pandemic stalled economic activities.

However, we are still paying a hefty sum for another fuel, natural gas, even though the international price of liquefied natural gas (LNG) crashed to record lows last month.

In short, the price gap between the domestic and international prices has been reversed as the local price had been substantially lower in the past.

Under the newly introduced third party access (TPA) regime that took effect in January, natural gas prices should be dictated by international price movements.

For some reason, the Energy Commission (EC) imposed yet another fixed pricing structure, effective for the whole of 2020, before another review was scheduled.

The fixed structure fails to address the recent decline in market prices, resulting in a mismatch whereby Malaysians appear to be overpaying for a fuel used for power generation and the glove manufacturing and steel industries.