THE CICAK.com

Fuel price hike in Malaysia: Bane or blessing?

Photo by lincolnose2
By JAY MENON

The reaction of the rakyat to the fuel price hike has been interesting, to say the least.

I’d never have thought we would react in such a positive manner; in fact I’m quite impressed that, minor demonstrations and votes of no confidence aside, there has been no larger fallout- at least on the surface.

I personally feel that the hike wasn’t a necessity; but more of an educational requirement, like an elective subject you take for your SPM, University or what have you.

Now what do I mean when I say it is not a necessity?

We all know that the hike came about due to the global oil price reaching heights that would even hinder the great Sergei Bubka, and we also know that this was caused by unscrupulous speculation. For those of you who think that world is running out of oil, think again.

According to the Schlumberger, one of the leading oil field service companies, the world is only at a third of its full oil production capacity, which means that there’s approximately 70 percent more oil to be exploited, much more than initially thought.

The fact that oil now fetches about $140 a barrel, a 130 percent increase from last year when it was round the $60 mark can be put down to speculation. The production cost for a barrel of fuel is around $40, so there is a 70 percent difference between the two prices- which we can attribute simply to a desire for more profit.

OPEC is the perennial scapegoat in this quandary as their refusal increase production is usually attributed to the exponential increase of the oil price, which in my opinion, is not the case but due to trading. Now that we have already established that the world is not running out of oil let us turn to the question of whether Malaysia is running out of this black gold?

A common layman answer would be YES, Malaysia is running out of oil and that we are doomed to be a net importer by the turn of the decade, because that’s what the government has said repeatedly.

As a professional in the oil and gas industry however, I believe the exact opposite to be true. Yes the current oil fields maybe running low, but that doesn’t mean that the country is running out of the stuff.

But why would the government say so then? For speculation purposes of course. It all comes back to profit. It’s like pretending to run low on something valuable that’s currently in high demand, which will naturally drive the price up. One would then miraculously stumble upon a large reserve that would be of great market value, just in time for the price to have been driven up! But then again, I am no economist.

So what proof do I have that we aren’t running out of oil?

I don’t have any Western Geco seismic technical data to prove it, but consider the following.

Firstly, there has not been any deep water development on our local oil fields up to this point. The fields that we have, that are relatively shallow, have been pumping for over 30 years; so of course they are bound to run dry at some point.

Petronas are embarking on deep water development while the likes of Shell Malaysia, has already begun and not to mention the heavy investments made by Murphy Oil as well. All of this must surely point to the fact that we have more oil within our borders. One would think that the logic here is if you find oil close to shore, there’s bound to be more the deeper you go. But then again I’m no geophysicist.

The other key pointer is that the biggest Deep Water and Subsea oil field solutions specialists have all opened shop on our shores. The likes of Aker, FMC and Cameron have advanced manufacturing and development yards scattered throughout the country.

Why would these major players in the Deep Water and Subsea markets spend billions of dollars investing in a region where its only net oil exporter is supposedly running out of oil? You know why? Because we aren’t! Aker Solutions, which is largest the Subsea and Deep Water solutions company in the world, a subsidiary of the Aker ASA conglomerate, has projected a 200 percent rise in business in South East Asia alone over the next 5 years.

Why would they release such a statement like that if Malaysia was running out of oil? I’m sorry if I have missed a point somewhere, but all of this smacks of the possibility that someone taking us for a ride. On a totally unrelated point, the top Malaysian oil men, namely one Hassan Merican, are always dodging questions about the prospect of finding new sources through future developments.

I hope I’ve made my point.

Let me explain what I meant when I said that the hike is an educational requirement. Malaysians have up to now been completely oblivious to energy efficiency because many were simply not aware that fuel is not a renewable energy.

Now, two weeks into the era where the cost-of-living has risen by 40 percent, the reality of it all has hit us, hard. Suddenly, everybody knows what the NYSE and FTSE are.

We’ve learned that there is such a thing called public transport, albeit it being a disgrace. Car pooling has been rediscovered and we’ve also stumbled across something called mileage on cars. So why have we been ignorant all this while? It’s probably down to the government’s failure to educate its population on global trends and issues. On the plus side, we might have less traffic jams now.

This situation will teach us that there are ways to counter higher living costs, with a little aid from the government of course. First off, we must demand that a better public transport system be put in place. Yes this cause has gained a new lease of life due to the price hike, but these loud calls should have been made sooner and more aggressively. We should have seen this coming.

Next up, alternative fuels need to be more accessible, i.e. NGV. There is no point in having just three NGV stations in the whole of KL and expect the masses to go for it, especially when there’s a battalion of cabbies perpetually there before you making filling up seem like eternity. Now that the demand for this is growing exponentially, the government needs to respond, to make it more available.

More diesel powered vehicles need to be introduced into the market. The modern diesel power plant is more efficient and cleaner than petrol engines. These engines have been known to achieve hybrid-esque mileages.

Having mentioned, the government needs to step up promotion of this technology. As in California, where hybrid drivers get tax breaks, free parking and toll fees revoked, we should also expect to go down the same road as this will give people the incentive to own a hybrid. It would also help the cause if the tax on hybrid cars were reduced to make the pricing more competitive.

Apart from all this, a number of public transport modes, buses in particular, should be run on bio-fuels. This is being proposed in many European capitals if not already in motion. The government should encourage car makers in the local market to use mileage as their selling point as this will make people more aware of its importance. In the Western country, that’s often the key selling point of a brand of car.

Of course, this may not happen as our “national car,” Proton, sells cars that have atrocious fuel efficiency and embarrassing emission standards. It follows, therefore, that, one of the next steps would be to do away with Proton, because the company’s products are endangering the environment and are very uneconomical if they are unable to meet the public’s expectations.

All commercial hauling vehicles, such as lorries or trucks for example, need to be Euro 4 or Euro 5 emission standard certified since the former is in its third year.

Singapore has released a directive to all diesel powered taxis to meet the Euro 4 emission standards within the next year. We should also look into the possibility of Nuclear power stations in order to reduce our dependence on fossil fuels for power generation because current technology has proven that nuclear power is safe and clean. The British and French governments are investing in this sector heavily.

Beyond technology, there are little things that people do can make a difference. Car pooling to work is one way. In fact the government should encourage corporations to promote car pooling internally, Any HR department can easily sort it out though it will be challenging in a corporate environment.

Businesses should look at cutting the amount of time its staff has to spending traveling for work-related matters, and use alternatives like teleconferencing, net meetings and videoconferencing as a substitute. Install motion sensors in houses and offices to save energy whereby lights turn off if there are no occupants in the rooms. There so many ways, the list goes on and on.

More importantly we need to help ourselves in this situation. If the government is going to keep mum of our natural resources and unethical speculation remains rife, there is nothing we can do for the time being but move on and try to survive I guess.

We have to explore all the options available to us, but also demand more from the government. It makes little sense for them to tell us to change our lifestyles when our tax dollars are getting pissed away into irrelevant projects and contraptions like submarines and space teh-tariks.

JAY MENON is a contributing writer for theCICAK.

Jay recently received his Master’s degree in optoelectronics and communications systems. He enjoys talking about football team Chelsea’s ups and downs, and playing his guitar. Visit his site.