THE CICAK.com

Malaysia’s looming energy crisis

By WAN NAZROOF LUQMAN

“Malaysia is an oil exporter, but if we do not find new oil reserves, then by 2009, we will become a net importer, this means we cannot continue to lean on the oil sector,” said Deputy Prime Minister Datuk Seri Najib Razak at UMNO’s 56th General Meeting at PWTC.

I was in Malaysia doing some research on the “real” reasons behind the reduction of fuel subsidies when I came across Najib’s quote on a website called the Green Car Congress. It startled me for I had always assumed that our oil reserves would last for decades.

If one were to glean through Petronas’s most recent annual reports, one would find such statements as: “At the current rate of production, Malaysia’s oil reserves is expected to last another 18 years.”

Yet, if this were true, how could Malaysia, according to Najib, possibly be an oil importer by 2009?

After months of sporadic research, I stumbled upon the fact that Malaysia’s oil production in 2005 was lower than the previous year despite a global surge in oil prices. Interestingly, an independent group of geologists claimed that Malaysia’s oil production peaked in 2004 and would then decline by 6.4 percent annually.

If Malaysia’s oil production did indeed peak in 2004, coupled with rising oil consumption of 3.5 percent every year for the past five years, it is thus possible for Malaysia to be a net importer by 2009?

For a country’s oil production to decline inexorably is far from surprising. In fact, this is the reality for the world’s richest, most advanced nation in the world, the United States of America. Having peaked in 1970, America now imports two-thirds of its oil.

Italy, on the other hand, peaked in 1997, Britain in 1999 and Australia in 2000. There is one thing that binds these four nations together - they all sent troops to invade Iraq, a country with the world’s second largest oil reserves.

There was public outcry over the reduction of fuel subsidies. And at first, I was puzzled by the government’s unwillingness to revert it. Then I realised that doing so would signal an absolute end to fuel subsidies, if not immediately, then some time in the near future. As we edge closer to becoming a net importer of oil, the amount of fuel subsidies will fall due to a drop in oil exports. Therefore, we should not be surprised by further increases in fuel prices.

Importing our way out of this looming crisis is not an option as it is very possible that oil prices will continue to sky-rocket. Instead, it is much wiser to concentrate on lowering our consumption of oil before we are hit by an oil crisis much worse than in the 1970s. Alas, even this seems unlikely as the public overwhelmingly prefers cars over public transportation.

It certainly does not help that the government is perpetuating this attitude by not improving public transportation in congested urban areas.

Malaysia must embark on a crash program to reduce its oil dependence. We should learn to accept some hardship now, if we wish to ensure a better future for all.

Note : A more in-depth analysis of this topic is published at this website.

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WAN NAZROOF LUQMAN BIN MOHAMMED NOOR is is a contributing writer for theCICAK.

Nazroof is an engineering student at the University of Manchester. He is a sceptical student who foresees many changes, which are neither bad nor rosy, in the coming year. Visit his site.