Effectively, there’s still a fuel subsidy

It’s almost two weeks since the increase at the fuel pumps. From RM1.92 per litre for 97-octane fuel pre-Jun 3, we are now paying an astonishing RM2.70 per litre for a petroleum-producing country. That’s what some detractors are telling us: vis-a-vis other petroleum-producing countries, our fuel prices are among the highest in the world. Why should our government be comparing our fuel prices with non-producing countries? It’s like comparing oranges with apples. Why won’t the government make comparisons with pomelos since both belong to the same citrus family? I’m certain there is a trade-off somewhere. Has anybody bothered to find out how much does a litre of bottled water cost in Kuwait or Saudi Arabia? And then compare it to the cost here in Malaysia? Please do that. Perhaps then, we’ll have a better perspective on prices.

I read on The Malaysian Insider about two weeks ago before the fuel price hike (but I can’t find the article on their website now) that the price at the pump was decided by this simple equation: (cost of the raw petroleum) + (cost of processing the petroleum) + (petroleum companies’ profit) – (fuel subsidy) = (price of fuel at the pumps). I accept that this is a very simplistic model but you get the idea. When the cost of petroleum goes up due to demand and supply, speculation, etc – the amount of government fuel subsidy goes up in tandem in order to maintain a constant price at the pump.

In the last year, petroleum prices have doubled in the world markets, even touching a high of RM139 per barrel. As a result, government fuel subsides have gone up a lot too until many governments are carrying out: enough, enough … we’ve gotta end the fuel subsidies and let the prices be dictated by market forces.

People are unhappy. The common folks are unahppy, the small businesses are unhappy, the big businessmen are unhappy, everybody is unhappy. Last Friday after prayers in Kuala Lumpur, there was a huge demonstration that ended with the demonstrators staging a sit-down protest and an extraordinary short prayer section at the road intersection of Jalan Tuanku Abdul Rahman and Campbell Road.

But I was thinking to myself. What can these rallies do? I know you are unahppy, you know I am unhappy. But what can we do? Bring down the present Barisan Nasional Federal Government and let the Pakatan Rakyat Opposition take over?

Remember, Brother Anwar Bin Ibrahim has pledged that once he takes over, he will reduce the fuel price or otherwise he will resign. I don’t know whether to support him on this or not. Frankly, I’m a little worried. He seems to be playing to a populist audience with little regard to the realities of the worldwide oil crisis. On the other hand, he may actually know something which we street plebians do not know. He’s not telling us.

But I’m also disturbed that Brother Abdullah Ahmad Badawi has suddenly told us that there’ll be no more fuel price increase until the end of the year, petroleum prices come what may. Does he mean to say that should petroleum prices touch RM180 to RM200 any time this year, we’ll still ‘enjoy’ petrol at RM2.70 per litre? To me, it sounds so very silly. Political bullshit. It just means that there is no removal of the fuel subsidies. The fuel subsidy is still there. All we’ve seen is a re-adjustment of the goal posts so that the subsidy is lessened. That’s all.

I’ve got lots more to say about this messy fuel hike but I shall reserve my counsel to another time, unlike Real Madrid.

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