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Oil Price Increase Is Not The

Government’s Fault
By Nik Haikal Nik Ibrahim - 12/11/2017  105  0

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Last Wednesday, the price of RON95 went up by seven sen.

Naturally, the rakyat were angry and blamed the government.
But the rakyat must first check the facts before blaming the government.
The rakyat cannot be angry with the government for oil price increase.
Here’s why.

Oil price is beyond the government’s control 


The rakyat should understand that oil price is not controlled by 
Oil price is dictated by world market driven by supply and demand situation.
If there are any global tensions in Syria, Iraq or Saudi Arabia, oil prices will
definitely go up.
This is because the world is afraid that if there is war, there will be a shortage
in oil supply.
So it is not fair to blame the government for any oil price increase.

World oil price is increasing anyway

World oil price is currently on the way up because the Organisation of
Petroleum Exporting Countries (OPEC) agree to cut down production and limit
As a result, oil price is strengthening and is expected to touch US$70 a barrel
by next year.
Minister in the Prime Minister’s Department Datuk Seri Abdul Rahman Dahlan
said oil price is also improving as shale producers in the US are also cutting
down on production.
So there is nothing that the government can do as oil prices are controlled by
external forces.

The rakyat must accept that oil prices are always fluctuating daily
———————————————————————————– 
Oil prices is always on the move and is very sensitive.

It is changing all the time either going up or down. 
Oil price can increase this week but the week after next, oil prices can go down.
So the rakyat have to accept this in mind and they cannot blame the

The oil increase is small and not significant

Sunway University business school professor of economics Dr Yeah Kim Leng
said the rakyat should be
thankful that the oil price increase is small and not significant.
The rakyat should be grateful that the increase was 7 sen and not 30-40 sen
which happens in other countries.
The rakyat would be burdened if the increase was as much as 30-40 sen which
could happen in the future.
Malaysia is lucky compared to other countries whose oil increase is much
So the rakyat should be grateful.

The government cannot subsidise oil anymore

The rakyat must learn to live with the oil price increase because the
government cannot subsidise petrol anymore.
The government had in the past subsidise some RM20 billion a year worth of
petrol and diesel for the rakyat.
But this subsidy of RM20 billion is not sustainable anymore.
This is because the government can’t afford it.
And the world is moving away from subsidies.
So the rakyat must learn to adjust paying for oil without subsidies.

Investors do not like subsidies

International investors also do not like subsidies.
This include petrol subsidies.
This is because international investors like to compete on a level playing field.
And leave it to market forces with no subsidies and they see this as fair
competition. 
So that is why the government has to wean off oil subsidies.

If subsidies are not taken out, the government will not receive investments. 
And this will be bad for the economy and the rakyat.

The rakyat should use more public transport

The rakyat should consider using the public transport a lot more.
The rakyat can also use more of the ride sharing or car pool to save cost.
In fact, Malaysia has nearly achieved the 60 per cent target of people taking the
public transportation regularly.
Minister in the Prime Minister’s Department Datuk Seri Nancy Shukri said in
Parliament that 60 per cent of the people used public transportation service
This is a good initiative as it will help reduce transportation cost and reduce
dependency on oil.
The government has also provided a lot of good transport systems such as the
MRT, Rapid bus and LRT.
The rakyat should take advantage of this.

The country should boost renewable energy

Malaysia should seriously shift towards renewable energy such as electric
powered vehicles and hybrid vehicles.
This will reduce the cost of petrol and will help to conserve the environment as
Proton should try to make its first hybrid vehicles.
The government meanwhile should reduce income tax for hybrid vehicles to
promote its usage.

Oil price increase will strengthen the economy

Even though an oil price increase will be expensive for the rakyat, overall it will
be good for the country.
This is because with higher oil prices, Petronas will benefit the most.
When Petronas benefits, it will be able to pay higher royalty to the government.
With higher royalty, the government can implement so many developments for
the rakyat. 
With better development, the economy will be strong and the rakyat’s welfare

will be better. 

TAGS economy Oil Price politics

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