And You're Saying About Oil?

Earlier on New Year, Najib was saying that the nation will go bankrupt if the opposition takes charge of the government that is willing to lower the prices (headed by the opposition).

You see, the government has used the $4.4 billion of subsidies saved in 2006 - resulted in increase of 30 cents per liter just to bail out the Port Klang Free Zone project, all because of Ling and Chan. With that, there was no extra development of facilities for the people in 2007 or almost. Tax payer money got wasted away. And they have owed most petroleum companies in Malaysia of the total subsidy to be paid for. That is why BHP and Exxon Mobil are slowly selling their stake in Malaysia to other fuel companies because of insufficient operation funds due to unclaimed money. Also, some other fuel companies are finding it hard to trade here or dig oil because of the extensive red tape in registration.

Because of the subsidy money emptied out, they will want to increase it after Chinese New Year and after general elections. With Malaysiakini reporting that the MCA elections put on hold until probably April, we can suggest that election is coming on March 15 2008. Then it is after that event where they will say petrol goes up....!

And before the opposition makes the response to that statement, we are hit by cooking oil shortage - that resulted in rationing. That, of course was due to the panic buying due of rumors of oil increase on new year and coming Chinese New Year. It means the government could be scoring an own goal behind their yard. Now you call others of mismanaging money whereas the government is mismanaging?

Image by Mob

Sometimes, if the oil prices are increased here, it presents a high chance for future price deflation. Matthias Chang has theorized that:

Many products are made from petroleum. So when petroleum price goes up, so would products derived there from as the costs in making these products have increased.

In time to come, as more and more people have less money to spend (same amount of wages, but lower purchasing power) they will buy less goods and services. Sellers faced with decreasing demand, will lower the prices (sales, bargains etc.) to attract buyers. This is already happening massively in USA in the last Christmas spree.

With increasing foreclosures, rising bankruptcies, credit card debts / defaults, more and more people will not be able to buy things. The “consumer boom” will collapse. In this final scenario, prices will generally collapse also. Businesses will close down, as there will be no demand for their products.

THIS IS PRICE DEFLATION.

My friend Eric did mention something of canceling out the effects from petrol increase. From that, I also stumbled upon an interesting piece of read that was sent by my dad to me. It describes tips - some scientific - yet useful from a petroleum insider working in San Jose, California. The four most potential tips that can be used to minimize or cancel effects from petrol increase when refueling your car are:

1. Fill up your car or truck in the morning when the temperature is still cool. Remember that all service stations have their storage tanks buried below ground; and the colder the ground, the denser the gasoline. When it gets warmer gasoline expands, so if you're filling up in the afternoon or in the evening, what should be a gallon is not exactly a gallon. In the petroleum business, the specific gravity and temperature of the fuel (gasoline, diesel, jet fuel, ethanol and other petroleum products) are significant. Every truckload that we load is temperature-compensated so that the indicated gallonage is actually the amount pumped. A one-degree rise in temperature is a big deal for businesses, but service stations don't have temperature compensation at their pumps.

2. If a tanker truck is filling the station's tank at the time you
want to buy gas, do not fill up; most likely dirt and sludge in the tank is being stirred up when gas is being delivered, and you might be transferring that dirt from the bottom of their tank into your car's tank.

3. Fill up when your gas tank is half-full (or half-empty), because the more gas you have in your tank the less air there is and gasoline evaporates rapidly, especially when it's warm. (Gasoline storage tanks have an internal floating 'roof' membrane to act as a barrier between the gas and the atmosphere, thereby minimizing evaporation.)

4. If you look at the trigger you'll see that it has three delivery settings: slow, medium and high. When you're filling up do not squeeze the trigger of the nozzle to the high setting.You should be pumping at the slow setting, thereby minimizing vapors created while you are pumping. Hoses at the pump are corrugated; the corrugations act as a return path for vapor recovery from gas that already has been metered. If you are pumping at the high setting, the agitated gasoline contains more vapor, which is being sucked back into the underground tank, so you're getting less gas for your money.

Also, do you remember that Citibank is aggressively promoting the 5% rebate credit card with Shell? I was contemplating of switching my existing card to that one but I was warned not to do so. According to smartconsumerbanking.com, the condition mechanism of the card will kill you before you can claim your rebate. Read here (this also applies to other cards like the UOB 4% rebate one):

Again, our friend Mr. Chang, I have to admit that he is no Sarah Connor but sometimes having their pleas and warnings fell to deaf ears could be the start of punishment for our ignorance. If Sarah's warnings of nuclear apocalypse on August 29 1997 rings true after an apocalypse perhaps we might consider Mr. Chang's rantings well. But this time better if before the disaster strikes. Where is Malaysia's safety net if an economic meltdown happens later on?