Friday, October 19, 2007

Oil Price Hike: Where Will We Be?

DCA Minister Shafie Apdal said on Thursday that an oil price hike is imminent given the fact that the latest crude oil prices has spiked up to $90 per barrel, given of the demand by the U.S in facing its winter season and the current face off between the Turks and the renegade Kurds at the border town of Turkey-Iraq.

This will be the fourth time in four years in the Abdullah Badawi administration that the government has raised the price of oil given the fact that the amount of subsidies forked out by Petronas and the government themselves ballooned according to the latest price of crude oil. To most of us, it means more money has to be forked out for food and transportation, the core two needs that a working man will have to pay out for. There is also a possibility, according to Petronas CEO Hassan Merican that Malaysia could be a net importer of oil by 2010 if the demand of oil increases 4 percent each year until 2010.

A Malaysiakini comment has clearly spelt out of what is to be expected in the next six months. Just be prepared for the worst has come. Secondly, with this scenario, the possibility of throwing general elections to stop Anwar Ibrahim, particularly cannot be done by this year itself.

A question is borne out of this scenario: with the price of oil going up, which are path we going to pick? The path of the common man, or the path towards better quality of living?

The Common Man's Path

To a common working-class man working in Malaysia, fuel hike means had to squeeze some more of necessity usage for use of food and transportation. And this can be a domino effect to their daily routine. Eventually it would builds up to creating more stress and tension to a person so much, if uncontrolled, it could destroy what is inside of a human being.

Just imagine, had the price of fuel remain at the price of before 2002, people do not have to pay that much to enjoy a bowl of noodles, regardless of anywhere we stay in Malaysia. Let's say back in 1999, the price of a bowl of noodles is at $2.80, in 2008, the price could be at $3.80 or so. The inflation rate is $1.00 per 10 years. Right now, just imagine what can you do if you can save $1.00 out of the price above? You can use it for other purposes such as accumulated savings for future use or something else you can name for yourself.

Some may blame the price hike of oil at oil players like those at Haliburton, NYME and investors for being greedy and speculative. You can say that those big fat rich men enjoyed the riches after playing the mercantile market, reaping the big profits while the others suffer. Are we going to result to being Mr. Payback, a vigilante fighting for a common man or calling for Michael Moore to save the day? Elite capitalism?

Back to the Malaysian context, the ex-journalist whom I met at Hari Raya Open House the other day pointed fingers at Mohamad Yackop for the problems of limited growth of Malaysia economy. He accused the government for not being proactive in improving the economy, saying that the progress was hampered by some ridiculous policies especially the NEP. He also poked a question at Yackop himself: The Sing dollar value is 2.3 times more than the ringgit, which is about 22% undervalued than the value before the pre-Asian financial crisis but worth 1.5 against the dollar. Why has no effort be done to strengthened the ringgit? The ringgit should be at $2.92 against the dollar right now (in his words) And Yackop's answer was just one line: Let the market decide.

To him, it was an answer that he could not accept. A common man would be convinced that having a strong ringgit would reduce the cost of imports of various products, including oil. Coupled with reduced tariffs - sure, I would be spending $263 against $302 to buy a barrel of oil. Imagine the amount of savings per barrel, $40! I can use $40 for other things....!

The next person he poked at is Shafie Apdal with another question, why all things go up but nothing has gone down? Shouldn't there be a review of price for people to enjoy? Shafie never answered the his disappointment.

Well, looking at the common man's perspective has many points, and the conclusion is that the government's failure to go more proactive approach in improving the economy, not relying on FDI and Economic Corridors and other things is dragging the people's feet down.

But have you look at the other side of the coin?

The Path of Better Quality of Living

I had a dinner chat with a schoolmate of mine during my secondary school days yesterday over this matter, and he seems to prove a point, with an aim to help people going towards a better quality of life, in terms of how society progresses into a better one, in context of reaching the Vision 2020 goal.

Have we look at how Singapore people had a higher quality of living than we do? If yes, the answer is because that the government is constantly encouraging them to stand on both of their feet. Sadly, this is what many people are unaware of: the government is trying to get them not to rely on them any much longer. The truth is subsidies, when viewed at a long run can be a crutch, shortcut that people would cling on. Imagine the amount of subsidies, if taken off can be used to other things for development. For example, according to my friend who stayed in UK for four months, the card machine there still uses a magnetic stripe card, whereas in Malaysia, we have the privilege of using a chip-based card. At least a billion ringgit has been spent for the financial sector as to improve productivity in financial services...with unused subsidies!

Perhaps this also encourages people to be more aggressive in achieving success in business without assistance. You see that almost every Singaporean at least owns a high-end level of a car and at least an apartment on their own, without government assistance to help them. This is because of that methodology that their government introduced...self-sufficient, self-reliance to achieve better good.

Inevitably, prices go up and up and it never goes down at all. Let's take a look comparing the price in 1993 and as of now. Sure, it went up, but what is the probability or a better question, how many occasions do we see prices going down? I mean, we are talking of consumerism here!

Now, in the current situation, is Malaysia prepared to take better path of living or merely sticking back to the common man's path? It seems that given the population status and average of amount they earn, we are still clinging onto the common man's path.

1 comment:

  1. Anwar Ibrahim is no longer an issue for Abdullah Ahmad Badawi and BN/UMNO .

    Anwar Ibrahim lost significant support by his own people, namely Dr. Chandra Muzaffar, Lokman Noor Adam, Ruslan Kassim, Nell Onn, Marina Yusuf, Hanafiah Man, Jomo K Sundram, which include the Mighty Zainur Zakaria.

    Now even Abdul Rahman Osman, Nalla Karupan and Ezam Md. Nor has already abandoned the 'sinking ship'.

    Who is left with Anwar Ibrahim in PKR????

    Ijok is a clear indication. Voters don't bloody care even personality like Tan Sri Khalid Ibrahim is Anwar's man trying to take a former local teacher, K Parthiban.

    In General Elections, PKR's resources would be spread too thin compared to a much focus by-elections like Ijok. PKR would not stand a chance, even in places like Permatang Pauh itself.

    Government/BN more interested in the "Feel Good" factor which has detiorate rather than very petty issues like Anwar Ibrahim.

    Study my analysis of Malaysian politics in general. BN is more worried of DAP rather than "Anwar Ibrahim"!


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