Friday, August 08, 2008

OIL PRICES: IN MALAYSIA AND THE REST OF THE WORLD

The world oil price is at three months low of US$ 119 per barrel, equivalent to RM387, thanks to these few favourable data that contributes to lowering the oil prices for the past 4 weeks:


  1. The announcement by George W Bush to lift the executive ban on off-shore oil drilling, which allowed more oil production
  2. Reduction in oil demand in US with the newly data shows that consumers travel less in May. Mileage in average of travel made by American consumers showed a dip in 4% meaning they travelled less and this signifies lower in demand
  3. The recent strengthening US Dollar
The level is low when compared with the level of US$ 147 or RM478, the record height in July 11 this year due to the concern over Iranian missiles test. On that eventful day, the Iranian showed the world how good they can built missiles that can crossed over Iraq and Jordan ended up able to land the missiles somewhere in Israel.

Yet the September 1, 2008 is a date when all Malaysian are anticipating since the government had decided to make the oil price to be floated and very much according to the global price. The government also decided to subsidy only 30 cents; meaning the consumer will have to pay pretty much 30 cents cheaper than the global market price. It is a pump-floated era with no longer any policy where government pay less subsidy when the price is low or pay more when the price is up. Maintaining 30 cents subsidy for each litre is a good thing, but the impact is not clear and we may have an unpredictable inflation and prices in the future.
Let's look at the current situation:
WORLD OIL PRICE at AUGUST 6, US$ 119 (RM 387)
1 Barrel of oil = 159 litres of oil
Therefore you have, RM387 per barrel/159 litres
So you have the production cost of RM 2.4340 per litre

Then, we have other things that also involved in it that we called
THE OTHER COSTS = Transportation + Storage + Commission + Miscellaneous
In Malaysia, the "Other Costs" = RM 0.32

Therefore, the oil price in a petrol station is
PRICE AT PUMP = PRODUCTION + OTHERS
The price at pump is RM 2.7540

But, the government is so generous to subsidy 30 cents for each litre
YOU PAY = RM 2.4540!! 25 cents cheaper than now!!

Then, do expect to pay this much on September 1, 2008 if this figure is been used.
* The figures given are solely based on the global oil price at August 6. This is not the real price you will pay but at the moment it looks like this way. Please be reminded that these value are estimation only.



Over the past 40 years, the global oil prices have been on the upward trend in line with inflation and time. However, the last 10 years saw the prices have been up exponentially and rapidly. Why? It is because we are running out of oil, or a group of peoples known as speculators are doing it for fun? The Chinese and the Indians which accounting to about 40% of the World population are burning fuel more and more each day making demand for oil remains high. Whatever the reasons are, we are running out of the fossil fuel, no doubt for that fact as some say the oil may diminish in 3 decades. And as i mentioned before in my earlier posts about oil prices, it was controlled and made by human - speculators for another group of human - consumers. Do you think that even if Saudi Arabia announced an increase in production of over 250,000 barrels daily today can make any differences in oil price tomorrow? These are the acts of a group of people who controls the oil. Spread some rumours, and ask people to sell for some personal profit, the oil price will up and down (fluctuate) each day.


I wonder if we have a system where no speculations involved - world oil price is determined upon agreements form all nations of the world. Ideally US$ 70 to 80 is the best range of oil we should be comfortably in. We hope that days do come, because if so, Malaysian oil price will be at RM 1.45. (Don't believe me, formulate this with the calculation as on above)


The oil prices over the past 30 years as shown on the graph above had been on upward trends - thanks to these few events in our lifetime; a long war between Iran and Iraq in between 1980 to 1988, 1991's Gulf War, ongoing weakening US Dollar since 2002, 2003's US invasion into Iraq, Katrina Hurricane in 2006, financial crises due to subprime issues in 2007 and recent developments in 2008.

Okay, it's not a total fault and blame to be directed to the government for the hike in oil price but the reality is clear to everyone. The government are able to control the oil price at more reasonable price if they managed the account well - less spending on submarines, less spending on this and that!! Do we really need those submarines to fight terrorists or any rapists looming on the streets? What's more important - charging people for sodomy (use money) or making the benefits for its people (also use money as well)? Change lifestyles okay!!

5 comments:

Falcon said...

i hope they really do..bu i doubt it...

acura said...

Should we wait for Anwar to lower it instead? hehe

BernardC said...

To Falcon:
Well the motto is like this, "In government we believe." Okay, yeah right!! Those ppl are so cannot be trusted one.

To Acura:
Good point, then we have 16 Sept again for new oil price!!

Robin said...

they better lower the price...world oil price up malaysia oil price up. world oil price down...i think they will maintain as usual

renaye said...

bad bad news for business ....

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