A Sane "VOICE" on the Oil Price Hike

Nowadays I spend twice the time of my normal 1-2 hours pre-March 8, 2008 surfing the blogosphere - it's not just passion (which had led Desi to start his Blue Heaven on March 15, 2005), neither is it mere altruism motivated to serveDANpamper my ER, but the main driving force is doing work for an exciting project including a new Website started recently by Dr LIM TECK GHEE, aided much by a fellow Founder-Director Dr Azly Rahman plus a small teAm at a modest office housed at the Selangor Chinese Assembly Hall downcity Kuala Lumpur.

Go visit www.cpiasia.org
and the current FEATURED THEME is on OIL & GAS
which highlights the latest dominant issue occupying the Malaysian public consciousness,via Media, both mainstream and new, Blogs and commenters.

Among the blog posts the past 48 hours that I surveyed,I came across one written by mGf "A Voice" which summarises what to my mind, are the core elements surrounding this hot issue. Desiderata has in fact written several posts whenever PETRONAS -- the national oil corpoartion -- announced its financial rsults every year the past three years, and believe me, I to questioned WHY AREN'T THE PEOPLE, THE RAKYAT, BENEFITING DIRECTLY FROM THE MULTI_BILLION RINGGIT "NET PROFITS" THAT PETRONAS HAD BEEN REPORTING FOR THE PAST THREE FY (FINASNCIAL YEARS) OF 2005, 2006 and 2007?

My core aurgument is:

*** Malaysia is a net exporter of oil i.e. we in fact do import lower-grade oil fror domestic use, and export our higher grade oil;

*** Being of higher grade, the oil Malaysia exports commands a PREMIUM price over the price we pay for imported oil, hence every time the world oil price rises,
MALYASIA GAINS IN TERMS OF GREATER REVENUES;

*** The only trouble is that the GOVERNMENT IS ALWAYS HARPING ON RISING SUBSIDIES, BUT MY ARGUMENT (also Sdr SALAHUDDIN's I infer) IS THAT THE GOVERNMENT KEEPS "MUM"ON WHERE THE "EXTRA" REVENUES GAINED BY PETRONAS ARE GOING TO, assuming everything being equal from the preceding year... since I started tracking the FY reporting for past three years? I will C&P and insert the numbers later today, PATIENCE, eh? You can tighten your belt, can surely be Miss Patience's companion!:(
I am awaiting its FY results for FY ending March 31, 2008 which is due for announcement any time now. If my dear ER sight the announcement, please Cut&Paste to forward to chongyl2000@yahoo.com. I'll buy ye tehtari', NO KAMNING as PM and DPM ask us to "tighten our belts and adjust our lavish styles" and we are obedient servants in deed and word. Wonder these leaders are also leading by example? THINKING ALLOWED AND ALOUD. Steal! We miss Jeff Ooi, (who, BTW, is also a director at CPI...) don't we?

Now surf to www.cpiasia.orgafter a "long" detour:)

Oil Price Hike: It’s Not The Best of Effort, Pak Lah
Bloggers Buzz
Written by Blogger, "A Voice", NOT yet midnight, nyet!
Thursday, 05 June 2008 16:00

Thursday, June 05, 2008



The extract of June 4th, 2008 Reuters report, “Malaysia revamps energy price system, risks backlash” reads below:

PUTRAJAYA, Malaysia, June 4 (Reuters) - Malaysia announced on Wednesday a broad overhaul of its energy price system, sharply raising fuel and gas prices but taxing palm oil and power producers in a move that would drive inflation to a 10-year high.

The reforms would save the government 13.7 billion ringgit ($4.23 billion) but risk further stoking public anger against Prime Minister Abdullah Ahmad Badawi, already fighting for his political survival.

Petrol prices would rise 41% (78 sen higher) to 2.70 ringgit a litre and diesel 63 percent to 2.58 ringgit from Thursday, Abdullah said, in a reform that would eventually lift Asia's second-cheapest pump prices to market rates.

Power distributor Tenaga Nasional's tariffs would go up by as much 26 percent while the price of gas supplied by state oil firm Petronas to the power sector would be more than doubled, he said.

"We try our best," Abdullah told reporters in the country's administrative capital near Kuala Lumpur...
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Abdullah doesn’t seem to understand many things, does he? It is not the best of effort.

And, he got the cheek to put up a 62nd UMNO Anniversary banner at PWTC that reads, "Kita Sentiasa Prihatin Kepada Rakyat" or something to that effect.

For one, Pak Lah lied.

Secondly, why can’t the people benefit as a net oil exporter? What so sinful about high expenditure? Can’t there be a creative way to not account as subsidy? Don't tell me we can't have cheap oil.

Third, the talk of removing subsidy for development needs does not jive. Who will benefit up-front from these economic corridors? Why must these developments be based on abnormal oil profit? Why must there be these economic corridors, in the first place?

Geez, such incompetence! Can we have a truly qualified Finance Ministers, not Economic Faculty reject and gambler of colossal losses? A Domestic Trade and Consumer Affair Minister that is merely a good talking burung tiung, but turn out to be a disaster when given responsibility.

This is just not about politics, the people need to have confidence in the ability of its leader to communicate, creatively handle problems and soften the blow to the people.

He Lied Again!

In the recent General Election, people can still remember the Prime Minister denied he is dissolving Parliament and actually dissolved it the next day.

Yesterday, the mainstream newspapers put up headlines that fuel prices would be up in August. Shahrir, in is usual twisted of talking, can the fine print in the report is consistent in saying it is fuel subsidy that would be totally withdrawn in August.

By midnight last night, oil prices were raised by a hefty 78 sen and when the words leaked in the evening, there was a mad rush for the petrol stations.

Basically, Pak Lah lied again! Shahrir lied!

People Still Can’t Get It

The fact that international oil prices have been on the rise has not gone unnoticed by the people. No one really believed Anwar’s General Election claim that he could reduce oil prices by 10 sen.

For the common people, it is illogical that we can’t continue to have cheap oil. Malaysia may have the one of the lowest in the region but comparing to the other oil producing nations, we have the highest! The comparative prices were circulating by SMS throughout the General Election campaign.

With subsidy about to be totally withdrawn, it is unthinkable for the common people for us to not benefit from cheaper oil and be paying international market price meant for oil importing nations!

The immediate issue that clings in the mind of many now is that Abdullah said and repeatedly said that we can’t afford a higher subsidy. It seems he claim, which reluctantly have to be taken in good faith, subsidy has taken up a third of expenditure.

Remember that he said the money is needed for development.

Malaysia is a net oil exporter and earns 250 million ringgit a year in revenue for every $1 rise in crude prices. Petronas is making extraordinary unexpected profits in the multibillions. Last year alone, was in the tune of RM70-80 billion, compared what it used to be RM10-20 billion.

Anwar’s argument that the Government can afford it makes sense to the common people.

How are we to dispute his simplistic logic that went well with the common people that the people are made to suffer for sake of development that only benefits the few?

Since oil revenue are extraordinary or out of the normal profit, Government can’t depend on it to be included in their development budget.

Pak Lah announced economic corridors in the billions, trillions and gazillions, knowing so well we do not have that kind of money.

With everything channeled to and through GLCs, which the normal businessmen aren’t accessible and only the Tingkat 4 linked project brokers are able to, how are the UMNO party people to defend against Anwar’s allegation?

A Matter of Accounting

Subsidy or no subsidy, it is a matter of accounting. We can retain cheap fuel for the consumers without having to resort to subsidy at all.

For one, retail oil prices are calculated based on international spot oil prices added the various cost and profit margin plus subsidy. As an oil producer, we could instead replace the international market price with cost of production plus profit margin.

With the technology today, there is no more the striking oil by sheer luck any more. Exploration cost can be controlled and technology has enable to reduce the probability of missing

In one trip to Dungun, this blogger was told that in the oil business, payback period does not wait for years, even six months is unusually long. That is the reason, time is the essence and cost is immaterial in the oil & gas supply support business.

The cost of oil is actually next to nothing, after all it is god given for Malaysia. We can have cheap oil. Thus, why is it sinful for the people to directly benefit from cheap oil prices?

Think about this, while the people are to suffer from expensive oil, the export driven industries and IPPs have been making billions from preferential fuel prices. The beneficiaries are the foreign shareholders of these PLCs, foreign providers of good and services, fat cat billionaire-shareholders, and GLC power brokers.

Is that fair and just, Accountant Amir-shame?

Alas, the government already pretty much decided that it will use global market rates for fuel in August.

Careless

The manner the oil hike is handled is very careless.

The political economic structure of this country is dependent on these subsidies to share the benefit of the bounty with the people. Inflation is kept and controlled at minimal to ensure rising prices do not cancel out the growth achieved

It a foregone conclusion that the hike in energy - fuel and electricity, and basic food prices – cooking oil, rice, sugar and flour, will have a devastating impact and at its worst a possible runaway inflation.

Inflation this year could be between 4% and 5%, the highest rate since 5.3 percent in 1998. Inflation last year was 2 percent. By the end of the year, interest rates will raise.

Shahrir had earlier said the fuel subsidy would cost the government as much as 56 billion ringgit this year based on current crude oil prices, or about a third of government expenditure in 2008.

Let’s not talk of the devastation of this new reform policy based free market approach, but just ponder with everything about meeting up to global benchmark and market, will we still have control on the direction of our economy?

If you could appreciate that the answer is no, beyond the cancelled crooked bridge, fall of Pulau Batu Puteh, WPI, strategic military manouvre, etc, this is another hegemonic policy of neo-colonialism.

And, it is masked beautifully under such jargons like free market, market determined, global competitiveness, efficiency, risk to return, quantifiable return on social policies, etc.

PS: Recently a participant to BUM2008 named Shankar had caughtUP wit' Desi to banter lots, and here are two comments seconding my call to my ER: DON'T LEAVE HoME!:):)


donplaypuks said...

As they say 'The revolution has come after it has happened.'

This massive 40% rise in pump prices is ill-conceived for a nation that produces oil and is still a net exporter. This will be THE reason for the demise of 50 years of misrule and maladministration by that party for Croneys and Elites.

It shows that billions have been wasted on floating mosques, monsoon cup runneth over, PKZ, unwanted tol roads, bridges & IPP's and extortionate charges, BN belly-dance junkets to Libya & cairo etc etc etc, that could have been saved to cushion our landing.

Watch S'pore. Are they panicking?

Can you believe the news in Wed's STAR (section 2) that d Cabinet approved FT's only BN MP (and presumably an entourage of about 50-100 BN & DBKL officials)to go on a taxpayers' junket to Germany & Canada to study how better to run a City?

Why, at 1/0000th the cost they can go to S'pore and see how one of the top 3-most effiecient Cities in the world manages its administration and integrated transport systems, and learn from them at first hand.

No, BN has to go. I am prepared to gamble with DSAI any time!!



donplaypuks said...

'Don't Leave Home, Without It?'

Roberto Calvi of Bank Ambrosiano, dubbed 'God's Banker' for his links to the Vatican, was mysteriously found hung from Blackfriars Bridge in London circa '80's. He had apparently once proposed to the Pope a Vatican sponsored Credit Card, whose tag-line would have been:

"Never Leave Rome Without It!"

With the price of petrol at RM2.70 p/litre and rumoured to hit RM4 soon to finance all these dead-end corridors as proposed by Rip van Winkle who hasn't a clue where the money is coming from, now we cannot drive out of our home without our piece of plastic in our wallets. Gunny sacks of cash is impractical.

We will have to Mobil-ise our savings to Shell out big bucks to fill our tanks with Asso.

But of course its all free for our Wakil Rakyats from whose ivory towers everything appears hunky-dory!

UPDATEd for the sakes of BIGmac MORONS hydeing in their mothers' A**sholes who can't see the light, my parting gft of eye-opener from an OUTSIDE PARTY, hence OBJECTIVE...

DAILY EXPRESS NEWS from its Online Edition June 6, 2008:
--------------------------------------------------------------------------------
Entire Federal Cabinet should step down: DAP

Kota Kinabalu: The entire Federal Cabinet should step down for failing to manage the nation's wealth and resources prudently, said DAP MP for Kota Kinabalu, Dr Hiew King Cheu.

"The latest abrupt announcement of fuel price increase by the Prime Minister again reflected the poor management of the nation's wealth and resources by the Barisan Nasional-led government. It is better for them (Federal Cabinet) to step down and let the Pakatan Rakyat take over," he said.

He noted that the Government had promised during the election that there will be no fuel price increase for this year.

"The people are going to suffer as prices of most goods and services are expected to go up," he said in a statement.

He also described the latest fuel price increase of 40pc for petrol and 60pc for diesel as unreasonable and unacceptable, since Malaysia is an oil-producing and exporting country.

By right Malaysia should be reaping a major profit from the export of crude oil, he said, adding the government "is not telling the people concerning the nation's crude oil sale".

He asked if it was true that our crude oil was being sold at a 'fixed price' without any fluctuation allowed in the selling price for a set number of years.

If true, it would be even more unfair to the people of Sabah since the State is also a major contributor for the nation's crude oil export.'

Dr Hiew also claimed the Government had over the years wasted billions of ringgit on mega projects, some of which have become "white elephants".

As for proposed rebate of RM625 for motorists in the country as a joke, he said:

"There are at least 10 million vehicles in Malaysia that are entitled to this fuel rebate. That means the government will have to pay out at least RM6 billion a year. Why not use this amount to subsidise our fuel?," he asked.

DESIDERATA:

Those points emphasised (BOLDED thus) are done by Desi.

I second all the points expressed by Dr Hiew, and re-echo here his questions too, all fair and square asked on the Rakyat's behalf as he is a Yang Berhormat/Berkdidmat Opposition MP.