On Gas and Fuel Prices

I’m typing this entry at 9.41 am while tuning into Bernama TV and, later, CNN, BBC and CNBC. The big buzz now, apparently, is the announcement of the petrol price increase made by the Government last Wednesday. I’m personally appalled by this group of people who seem to capitalise from this rise.

Let’s do a reality check, shall we? Before a certain Deputy Prime Minister and Minister of Finance was sacked in 1997, the price of oil was less than US$30 per barrel. Today, it’s passing the US$130 per barrel mark. Heck, there are predictions the price will march onto US$200 per barrel!

 

The Federal Government’s move is not populist one, as we can anticipate. But when global market dictates the prices of commodities traded internationally, there’s little thing that a nation’s government can do. Sure, as a country with it’s own oil and gas reserves, we can ban export of oil. If we’re going to do that, I hope that we could ban the export of oil and gas from the states producing them, i.e. Sarawak, Sabah, Kelantan and Terengganu.

The equilibrium, if you may, is a rather complex one. Certain quarters were insisting that the Government use the profits of PETRONAS, the National Petroleum Company linked to the Government, to subsidise the rising cost of gas. On the surface, it sounds like a sound idea. But throw in the number of employees, the rising cost of oil and gas exploration, the development programmes of this company etc. etc., will the idea be viable? Yes, if you want to see major retrenchment and a possible bankruptcy filed by the national oil and gas company. The then Minister of Finance could not offer the States of Sarawak, Sabah, Terengganu and Kelantan an increament in royalties rightfully entitled to that states then, now he’s promising the world? Good God!

Yes, the rising price of fuel and gas will take its toll on the lower income group. I’ve been saying this over and over again orally, the group to be under the spotlight should be on the poor. Those in the middle income and higher would be able to absorb the costs. But right now, the Government is seeing the backlash in policies which damages the mental of the populace. Namely, the subsidies and protectionist policies and its generics.

Again, the group which promotes demonstrations and offer nothing but criticisms and condemnations disgust me. While they proudly call themselves the Opposition and walk as if they are the next government, they offer nothing new to this country at the Federal Level. What they will do, I anticipate, is that they will initiate populist policies while under the same breath do away with the Barisan Nasional’s policies and intiatives. After that, it wouldn’t surprise me if they introduce similar policies but with a new and different packaging. Take the Internal Security Act, for example. Many members across the floor (pardon my Parliamentary Language… No, these words aren’t employed by the Parliament of Malaysia. I look up to the Parliament of the United Kingdom when it comes to decorum, order, dignity, honour etc.)… Any way, the members across the floor calls for its abolishment. Strangely, none from Pakatan Rakyat talks of repealling Article 149 and 150 which allows the passage of the ISA, nor do they talk of revoking the Proclamation of Emergency. These two components are the roots of the ISA, Sedation Act and all preventive measures laws. It seems that they do not like the leaf which grows but they want the roots.

My economic understanding is guided by the supply-side school. Demand for fuel and gas are increasing but the supplies are deminishing. Meaning, the humankind needs an alternative to gas anf fuel, IMHO, thus the Government needs to encourage, if not compel, for study and R&D going in this direction. We need to increase the supply to meet the demands.