Petrol Prices – Why was there an increase?

Jun 4 – The Malaysian Government announced a RM 0.78 increase or 40.6% for petrol to RM 2.70 per litre and a RM 1.00 increase or 63.3% for diesel to RM 2.58 per litre.

The announcement has caused a massive traffic jam caused by motorists who tried to fill up before the midnight deadline. I really don’t understand the mentality behind this. Imagine braving a jam and queue for 30 to 45 minutes, in order to save at maximum RM 40.00 assuming your tank was empty and could take up RM 100.00 for a full tank. The jam and queue would probably have burnt off a significant amount of the savings.

The following day, the was a public uproar all over and the opposition were having a field day bashing up the decision. The government on the other hand were trying to justify its decision and used Singapore as a model where the petrol price is RM 5.20 per litre and diesel is at RM 4.22 per litre.  This comparison naturally brought out the critics as Singapore is not an oil producing nation and would have to pay higher. Critics took the other end of the scale and quote Venezuela where petrol is priced at only RM 0.16 per litre. The question thrown is why should we be paying 16 times more than Venezuela when both countries are nett oil producers? Anwar Ibrahim reiterate in his blog that he will reduce petrol prices if he is in the government. He questions the accountability in Petronas.

First and foremost, we should examine the facts. According to the CIA World Facts Publication, Malaysia is still a nett oil producer. In fact, Malaysia is ranked 26th in the world ahead of Brunei who lies in 42nd spot. We produce 751,800 barrels compared with Brunei’s 219,300 barrels per day. However, Venezuela whose retail petrol is one of the cheapest in the world is the 10th largest producer with a capacity of 2.8 million barrels per day. Interestingly enough, Venezuela has a population of 26 million which is almost identical to ours. With an oil production which is almost four times ours’, Venezuela would be in a much better position to subsidise petrol than us.

Interestingly from the list of major oil producing countries, our government should have used Norway as an example instead of Singapore. Norway is the 8th largest producer in the world with a daily output of 2.9 million barrels, yet petrol cost about RM 4.20 per litre in Norway.

Rank

Oil Producing Countries

Barrels

per day

1

Saudi Arabia

11000000

2

Russia

9870000

3

United States

8322000

4

Iran

4150000

5

Mexico

3784000

6

China

3730000

7

Canada

3092000

8

Norway

2978000

9

European Union

2868000

10

Venezuela

2802000

11

Kuwait

2669000

12

United Arab Emirates

2540000

13

Nigeria

2440000

14

Iraq

2110000

15

Algeria

2090000

16

United Kingdom

1861000

17

Libya

1720000

18

Brazil

1590000

19

Kazakhstan

1338000

20

Angola

1260000

21

Qatar

1111000

22

Indonesia

1070000

23

Azerbaijan

934700

24

India

834600

25

Argentina

801700

26

Malaysia

751800

27

Oman

740000

28

Egypt

688100

29

Australia

572400

30

Colombia

539000

31

Ecuador

538000

32

Yemen

402000

33

Sudan

397000

34

Equatorial Guinea

396100

35

Syria

380000

36

Denmark

342000

37

Vietnam

319500

38

Thailand

310900

39

Gabon

266000

40

Congo, Republic

235900

41

Congo, Dem. Republic

235900

42

Brunei

219300

 So where do we really stand in terms of petrol retail prices in the world?

From a compilation of data done by NationMaster.Com, Malaysia lies in 127th place in retail price index for petrol. This data was done in 2004 when our Malaysian petrol cost RM 1.37 per litre. With the increase to RM 1.98 and the latest to RM 2.70 per litre, we would have moved up the ladder some 30 to 40 places but we would still be in the bottom half of the cheaper places in the world to pump petrol.

Check out the statistics here.

After all have been said, we should not be objecting to the increase in petrol prices. We should not be having demonstrations and fuelling the public anger like what the opposition is doing. All this fuss will not get us anywhere.

More importantly, we should be looking at the bigger picture. We should be asking why did the Prime Minister went ahead with the increase in petrol prices? In the current political climate where Dato Seri Abdullah Badawi’s popularity is at an all time low, such an action is almost political suicide. No politician in the right frame of mind would have done it. Couldn’t he had waited? The timing just does not make sense. 

So why did he do it? Is the situation so bad that he has no choice but to do it? Is our country going bankrupt? Or is the current government crumbling and is likely to lose power altogether, so this is a last ditch attempt to raise more war funds for the party to fight another day. Or is it for personal gains. Such thoughts are really worrisome.  

This entry was posted in Politics and tagged , , , , , , . Bookmark the permalink.

5 Responses to Petrol Prices – Why was there an increase?

  1. goodtimepolitics says:

    Gas has been on the increase for alittle over three years now! Guess who was in control of congress the last three years plus! Thats right: Democrats!
    http://goodtimepolitics.com/2008/06/05/scandal-threatens-presidential-race/

  2. Pink Jeans says:

    Well, it has already been said that the petrol has been underpriced in Malaysia for a long time. I think that’s true because you only have to look at the prices of petrol elsewhere. Looking at the increase in the crude oil price, and how the price of petrol is escalating worldwide, this is a timely and justified move, albeit unpopular as it may seem. Do remember that refinement makes up a large part of the petrol price; the raw material is only part of the picture, and Malaysia does not have its own refinery. The situation should be looked at in perspective and consumers, though understandably upset, should try not to get too emotional. Of course, one would hope that the government will be fair and reduce petrol prices if and when the price of crude oil comes down.

  3. asme says:

    goodtimepolitics – I am even more skeptical of the Republicans. Who is in charge while America continues to plunder Iraq’s oil? Republicans!

    Pink Jeans – It is not so much about the increase in petrol prices. It is more about what is the government going to do with the savings they would have made from the price increase?

  4. shorthorse says:

    Well, we’ve lived with subsidies and handouts…time for a reality check. Only thing is, it is the man in the street who is set to suffer with the fallout spreading to the public transportation sector, the food & consumbles sector.. The worst thing is how many companies will put this into consideration when adjusting salaries … your guess is as good as mine.

  5. asme says:

    You are quite right. Most companies will use the government published inflation rate as a guide for salary adjustments.

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 )

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s