Fuel price-to terms reality

KUALA LUMPUR, Nov 13 (Bernama) -- Malaysians will be ushering 2008 probably with much anxiety, as there are already indications that a rise in the price of fuel is inevitable.But just how much the increase will be in 2008 after the government kept its word that there won't be any increase in 2007? It's certainly difficult to speculate on the quantum increase but Malaysians certainly have to face higher cost of living.Malaysian consumers have every reason to feel anxious as they have already seen a series of price hikes relating to essential items during the current year with the latest being the rise in flour prices that in turn pushed up the bread prices between 10 sen and 30 sen effective 1 November.Prime Minister Datuk Seri Abdullah Ahmad Badawi had made it clear that government would review the existing petrol and gas subsidy mechanism looking at the current scenario.
DIFFICULTY IN SUSTAINING PRICES
Its definitely burdensome for the government to continue maintaining the current retail price of fuel when crude oil prices in the global market are about to surpass the the US$100 (about RM334) mark per barrel.Though the rising prices in the international market may have benefited Malaysia, a net exporter of petroleum, the fuel subsidy is depleting the national coffers.According to the Federation of Malaysian Consumer Associations (FOMCA) Communication Director Mohd Yusof Abdul Rahman, any increase in the price of crude oil means the government has to spend more on subsidising petrol, diesel and liquefied petroleum gas (LPG) to keep their retail prices low.As for the first eight months of this year, the government had to cough out subsidies worth RM16 billion to maintain the retail prices of fuel in the domestic market while the price of crude petroleum went up to unprecedented levels.Currently in Peninsula the retail price of premium petrol RON97 is RM1.92 per liter, RON92 RM1.88 per liter, diesel RM1.581 per liter and LPG RM1.75 a kilogram.
NO ALTERNATIVE
As fuel is the enabler for transportation and manufacturing activities, thus any increase in its prices will definitely impact both sectors.According to Mohd Yusof, the effect on both sectors in turn would bear upon the prices of goods and services down the line, which has to be borne by the consumers."Looking at the people's reaction following the 30 sen per liter increase in 2006, what worries them is the transportation cost that would also indirectly impact the cost of goods and services."What more when consumers are left with no choice but to use their own transport to commute to their workplace or for other purposes," he said referring to the public transportation that is still unsatisfactory.If the people had a choice, say they could opt for a reliable public transportation system or natural gas vehicles (NGV), then they may not react negatively on the fuel price hikes."Currently most of the NGV are taxis. If Malaysian made cars like Proton and Perodua come up with vehicles with both petrol and natural gas tanks, they will provide great savings for vehicle owners," said Mohd Yusof.
MISSUSE OF SUBSIDY
On the fuel subsidy, Mohd Yusof opined that it was only appropriate for the government to review the petrol and diesel subsidy."Currently the petrol subsidy is enjoyed by all private vehicle owners including the high heeled who don't deserve the subsidy."The subsidy is also enjoyed by foreigners like Singaporeans who refuel in Johor Baharu and the Thai who procure fuel supply in Perlis and Kelantan," explained Mohd Yusof.Even the fishermen who enjoy a RM1 subsidy for every liter of diesel are known to abuse the privilege by selling the subsidized fuel in the black market."A study conducted by the Agriculture and Agro Based Industries Ministry clearly indicated a rise in the sale of subsidised diesel but the catch is on the decline. Therefore, the subsidy doesn't serve its intended purpose," he said.Mohd Yusof noted that as the government has to bear high subsidy cost and tax relief on fuel, thus its only appropriate that the subsidy is utilised to upgrade public transport, health and education facilities.
HAVE TO BE BORNE TOGETHER
Meanwhile, FOMCA's adviser Dr Hamdan Adnan said Malaysians have to accept the rise in fuel prices with an open heart and bear in mind that the government has been subsidising fuel prices all this while."Regardless of what happens we have to keep up with the current developments. The government should not be blamed; it is due to the oil prices in the global market," he said.The government can only provide a small portion of subsidy and the rest must be borne by the people.Dr Hamdan pointed out this is definitely difficult as of late the consumers had to bear a series of price hikes involving various goods."They are increasingly burdened. The feel good factor is no more there," said Dr Hamdan.The people too are concerned with the development as sooner or later the price of other goods too will rise. What more when the toll rates on the highways are expected to go up in the New Year."Therefore we hope that even if the government rises fuel prices, the increase won't be excessive as it will only worsen inflation," he said.The inflation rate is reported to have gone up by 2 percent compared to five percent last year.
STEPS TO CONTROL PRICES
The government has been advised to take necessary steps to ensure there is no unreasonable increase in prices of goods or services when the prices of fuel goes up.According to Dr Hamdan, the government must ensure this looking at the fact many parties, including the transport operators, would be lobbying with the government to hike up prices."We don't want a situation where government servants have to seek another pay hike and it is a known fact that the rise in salary only gives rise to a never ending inflationary cycle," he explained.However, Dr Hamdan noted that Malaysians must count on their blessings because despite promoting capitalism and free trade, the government also regulates the prices of necessities.At the same time, he also said that the consumers should not forget that the trader too has to make a living but the government has to cap the profit margin for price controlled items."I hope that the government would be able to cooperate with the non governmental organisations (NGO) in this respect," he added.
CHANGE YOUR WAYS
In what ever situation, the attitude is the one that will decide whether the hike in fuel prices will badly affect the consumer's financial position. Whether we are prudent in our spending or splash the money beyond our means will be the deciding factor.As pointed by Dr Hamdan, Malaysians can no longer afford to spend as they liked and have to come to terms with reality and build up resilience."We have been in the comfort zone for far too long. This comfort zone would shrink further in the new year," he explained.Apart from being prudent and seeking additional income to meet the rising expenses, one should also think of reviving the "Green Earth" programme by planting food crops around the house compound and cut down on fuel use by sharing vehicle for example.Regardless of the attitude or the actions that we take, as consumers the choice to live lavishly or prudently is in our hands.