Economy 101: Crazy Effect Of Fuel Price Hike

(Picture source: www.daylife.com)

Chaotic, crazy, the end of the world…

That was what I was thinking as I saw the mile long queues at the petrol stations near my house. I was tempted to join the queue but why waste fuel queuing when the same amount can be used to pay the increased fuel price and that too without queuing and wasting time.

No thanks to a PM who thought that a last minute announcement of fuel price increase would be funny to Malaysians.

The announcement

By now, most of us would have known the details of the “caring, win-win” announcement by the PM. An increase of 0.78 cents which effectively means I have to fork out an extra RM30 for a tank full of petrol – is still manageable.

The announcement was expected but certainly some “advance notice’ would have been preferred. Can you imagine the panic that it caused when it was mentioned in the news that the motorists only have 4 hours before the new rate goes in force?

If the flip-flop PM decided on the effective date of the new rate, say 2 days after announcement, it would have given enough buffer for the motorists to run to the petrol station to top-up. 4 hours of buffer only creates panic buying of fuel and in the process, a massive traffic jam.

The ban un-banned

The subsidy is still there even with the new rate. So, with the ban to foreigners to purchase subsidised fuel uplifted, the Malaysian Government has decided to be charitable – RM1.0 billion of Malaysians’ hard earned money will fall on foreigners’ hands.

If the Government had announced 2 tier pricing system, then it would have been fair – the Government would have saved up that RM1.0 billion and would perhaps re-channeled to rebates and other needful developments (renovations at politicians’ houses does not count though). Foreigners would have access to fuel at the border too. Why the flip flop decision on allowing subsidised fuel to be given to foreigners?

One Singaporean lamented that he spends more on food and groceries than on fuel – hardly a strong argument if you ask me. Food and groceries are not subsidised by the Government with public funds.

There may be control on the price and if even if there is “subsidy” on food items, the amount is much smaller on the subsidy spent on fuel. Besides, by buying other items from Malaysia, the foreigners are not exactly being “charitable” to the local economy, they just buying where it is cheaper.

There should not be a complete ban – that I agree but at the same time, 2 tiered pricing systems should be in place for the foreigner to pay the market price. Where is the justice for the locals where public funds are also being used to subsidise the foreigners?

Thanks Pak Lah – for being the PM for “all”.

Market Price

I can change my lifestyle in order to pay higher for the fuel but things must be fair too. Are we getting other items at market price – the price of car for example? With prices of car artificially inflated by means of taxes and other charges, Malaysians end up paying more for car and fuel.

The only “option” then seems to be buying Malaysian made cars. This is still fine but the question is how fuel efficient is Malaysian made cars? Will the lower pricing of cars is enough to offset the increase pricing of fuel?

Already the public transport system is in such a mess – hoping more drivers will abandon their cars and use the public transport instead seems a far reality – the promised improvement of public transportation remains a promise.

The subsidy

High subsidy will only lead to wastages and higher consumption of fuel (I can’t wait to see the impact of this on traffic jams). With Malaysia becoming a net oil importer soon, it is high time to reduce wastages.

But what about politicians and high flyers in Government who think public funds are their personal piggy bank? Is it true that Petronas’ colossal hidden profits is being used for cronies and family members instead of the people?

Last words

Fuel and electricity tariff has gone up – food stuff and all other items price is going up. The question is by how much. What the Government is going to do about it?

Better management of public funds, efficiency of work and stop wastages is the only way out now but maintaining subsidy is not. Will the Government stop acting as a 3rd world government (where wastages and empty promises is the game of the day) and start acting as 1st world government?

Read Also

Petronas’ RM600 billion profits where has it all gone

In support of the petrol price hike

Gas Price from Oil Producers

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