Full price is 4 ringgit plus

In everyone’s rush to get petrol last night and preparing for oil protests we cannot forget that this is not the last price increase.

The minister for domestic trade and consumer affairs Shahrir has made mention several times that the objective is to get us to pay market price at the petrol station, and that is 4 ringgits now.

So in two months if the global oil price does not recede we are in for another shock, and I am not sure it is going to be pretty.

Let’s work our way through issue. The basic questions for an inquiry.

Should people pay what something is worth?

And does that question change if you have that something is a natural resource of your country. If we did not have petroleum exploration ( which is a boon) then the question of whether we pay something for its market price is academic.

Let us take off our Umno, Pkr, Pas or DAP hats for a second and look at the two schools of thought.

a) no subsidy. The direction of the Umno government for now

b) subsidy built on our oil production. The Pakatan Rakyat think.

We are all inclined to cheaper petrol, however what do you do when you have a hefty subsidy bill? There is also the issue of the Independent Power Producers who are taking up a major chunk of the subsidy as they use petroleum to produce electricity. And then the business of selling our cheaper petrol to foreigners. There is issue of those profiting from the subsidy.

And we do need answers. If petroleum is 16 sen a litre in Venezuela then I suppose the Colombians and Brazilians look forward to driving to Venezuela for cheaper fuel, is that wrong?

And are Malaysian lay-persons responsible for the various agreements tied up by the Malaysian government with the Independent Power Producers who seem to never lose out when oil price rises. A situation of ultra vires?

Subsidies are always going to be a losing battle in the long run.

However if the Malaysian government wants to remove susbsidies, then they have to show good husbandry of the oil revenue they will generate. If I am paying global oil price, then the money my government makes from my own national oil has to be consistently invested for my long term benefit.

Batu 9 has argued previously to funnel the money to fixed financial institution which only distributes dividends without touching the principle like the Alaskan Permanent Dividend Fund.

I believe most of the objection to the state holding on to oil revenues on behalf of the rakyat is that there is widespread belief, money in Umno hands is money wasted.

Which leads me to the second and what is seemingly popular choice, to have subsidies as long as we are a oil producing nation. Mahathir is quoted in malaysiakini today to have supported the idea of keeping subsidies because we produce more oil than we use.

I see the long term solution is in relying less on oil and more on alternative energy source, and also reducing private consumption of energy, irrespective of whether it is oil or solar or windmills.

However in the short term I am inclined for subsidies. If a subsidy can prevent a maelstrom of price increases which will force us into a possible prolonged escalation. I am not going to use the word hyperinflation, but just because we have not had one since the Japanese occupation does not mean it is impossible.

The Indonesians had one, so we are not above it are we?

I am trying not to look at the Umno establishment as distrustful people, but the scarce nature of information in this country for the last 25 years has disallowed any of us outside Umno’s top echelon to have a reliable knowledge of the nations accounts.

Even the subsidy amount differs depending on which ministry or politician you ask. So what gives?

In a situation like this, going cautionary is not foolhardy, it is probably prudent.

But that won’t change the minds of the FRU guys waiting for the protests this weekend will it. Even if the very FRU guys once they chuck their baton, mace and shield, are just men and women who take in a civil servant salary and will squirm like the rest of us when they visit the petrol station this weekend.

So are we ready for 4 ringgits. That is what we are facing if Umno is in charge of the country in August.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.