Oil, Where Art Thou?

Fuel up but don't fuel yourself to the streets please!!

2008 is a year of economic crises. But unlike the crises in 1997 which involve currency rate and commercial shares which saw huge slump, this time the comodities are on the rice. Tomorrow, 5th of June, a new price system for fuel in Malaysia will be enforced.

This is how it looks like dear Malaysian,
Petrol RM 2.70, up RM 0.78 a litre from 1.92 previously
Diesel RM 2.50, up RM 1.00 a litre.

Under the same scheme, drivers of smaller vehicles will receive a cash payment to offset the rising costs. It also revamp the way the fuel subsidy will be. The new structure will see cars 2000cc and below will received RM625 in cash, equal to 800 litres of petrol. This may possibly include pickup and jeep. The motorcycles below 250cc while will received RM150. However, the new price of 2.70 ringgit did not reflect the full market value, which could be as high as 3.00-4.00 ringgit when the price controls are completely removed in August.



With that move, the CPI (consumer price index) is expected to rise to 5.0 percent this year. Without the new measure, the government's actual payout for oil subsidies would have totalled 28 billion ringgit this year, and that it will now save some 4.0 billion ringgit. Malaysia has already moved to ban sales of subsidised fuel to Thais and Singaporeans who make trips across the border to fill up their tanks.



So now you are clear how the new system will be. But the point is that, once petrol price up, others will go up as well. For more please visit: http://thestar.com.my/news/story.asp?file=/2008/6/4/nation/20080604175025&sec=nation



Look at these scenarios:

• Fueling your car will definitely be up.
• Buying a Gardenia bread will no longer be RM 2.10 for 14 slices since flour is up and fuel is up. You think the lorry driver don't pay their fuel?
• Your cheap economic rice is no longer economic. A plate of rice with 2 dishes may costs you RM4. Consider that you add another it may have gone up to RM5.50!!
• Rapid KL bus...no longer RM2 perday!!!
• It may be clear that you might need to pay extra cents for each unit of electric you used to run your air-cond!!

Wow, just a single fuel price increase, other stuffs may and will be affected as well/

So now what?

I joked with some of my colleagues that there might be street demonstration will be going on to protest this sharp increase. Why not? The increase is about 41%. RM2.70 is not something we used to have. The sudden increase will definitely hurt the inflation. I was wondering why don't they just increase gradually. I'm sure people don't mind if the fuel price was increased RM 0.10 every 2-3 months over the past 2.5 years since the last hike on fuel?? Too drastic is your move, and these will upset people. Giving back cash via cut on road tax, sounds interesting, but the cut won't sound as interesting as you think. In fact, the road tax has always been low for some users with "low-standard car". I am wondering how happy are those with Kancil, Proton, Kelisa or MyVi. And for sure, after this, many people will switch to these low fuel-consuming vehicles.

Although now is only 9.30pm, with the price will only be officially up in 2.5 hours, I have already seen major traffic jam around KK city. Even the flyovers are jammed. Why not, people queuing up to fill up their tank to the fullness in these critical moment. Why not?



Yet, people in the coffee shop around town has been buuzzing their antenna and eidely talked about this issues since this afternoon. The current hottest topic to talk about is definitely oil. Looks like the talk will only be even heated up by the fact that rice, flour, chicken and others are going up as well. I saw and overheard old granpies and uncles were so excited to talk so low about how much I'll have to fuel, how much different it will make and scolding the government for these things. Who doesn't at these hour?



The move to increase fuel prices are expected since the government decided to announced a new fuel price system since last week. 41% is just too much. Considered that the price will up again in August to match the global market. RM 3.30 seems to best prospect it will be.



Let's don't speculate any further. For the next 2 months, be brace yourself for more. I do see the point of the move to hike 41%. The government had decided and finally realized that subsidizing the fuel may ballon up to RM 28 plus plus billion this year. At the same time, Malaysia are well known for subsidizing other stuffs as well like ricem education and so on. But cooking oil, rice, flour and sugar are in rises as well. The price are so high that it will hurt the subsidy even more. And yet the government is so generous that they have decided to subsidized more on food than oil. How awesome??