Najib: Fuel prices can’t be reduced continuously

The government cannot reduce the retail price of petrol and diesel continuously when global crude oil prices decline as they are volatile and can increase again within a short period.

Lowering prices too fast and too low could also have an adverse impact on efforts to develop alternative sources of energy, Deputy Prime Minister Datuk Seri Mohd Najib Razak said here yesterday.

The current low price of oil "is not sustainable, it's going to go up (and) when the price goes up, there will be a need to do a review," said Najib, who is in the Peruvian capital to attend the Asia-Pacific Economic Cooperation (Apec) summit beginning today.

He was responding to questions on the impact of the low global crude oil prices on fuel prices in Malaysia, on Petronas and on the economy at a press conference with the Malaysian media at the Miraflores hotel here.

Najib spoke to media after performing Friday prayers at the Peruvian Islamic Centre. He also gave a contribution of US$5,000 (RM18,000) to the centre.

He said that most petrol pump operators found it difficult to cope with prices that are fluctuating on a daily basis or even on a weekly basis and they wanted a degree of certainty as far as the petrol price was concerned.

"A review once every two weeks is something they can accept," he said.

He added that the global oil price would not stay at US$50 per barrel indefinitely and would eventually increase.

"Furthermore, the price of goods has not declined in tandem with the fuel price reduction," he said.

The government has reduced the retail price of petrol and diesel five times over the past few months, the latest was on Monday as crude oil prices fell significantly due to the global economic crisis.

However, just last July, crude oil prices touched a record high of US$147 per barrel. The spiralling prices prompted the government to raise petrol and diesel prices in June.