Title: Petrol Price Hike.
I am writing this from the other side of the world, petrol price rise in Malaysia does not mean that much to me. While I appreciate that an increase in petrol price might have flow on effect in secondary price rises in other goods that uses transport to reach its market, like most essential goods and food items, I don’t buy much petrol, maybe on average $20-$30 a week. You see, for the past 2 years since the price of petrol started rising in the world market (over here it was NZD80 cents (RM1.50 back then) a litre 5 years ago, now NZD1.49 (RM3.70 now) I have been using my old trusty bicycle. I only used my car to transport the kids sometimes and whenever I need to transport stuff like groceries from supermarket. Now I am not suggesting that everyone should bike to work, it would take an hour if you live 15km away, but if it just 5-6kms, it would be good for your body. You can do away with your weekly gym session! If public transport is available and possible, why not use it? Over here, secondhand bicycle prices have been rising steadily for the past 2 years. Sure sign that people start using alternative form of transport, and saving the world energy resources, in this case oil, at the same time.
I applaud the government move to face the reality that higher oil prices, and hence higher petrol price is here to stay. Over a year ago I wrote to www.malaysiakini.com.my and www.malaysia-today.net suggesting that the government do away with petrol subsidy and let petrol prices at the pump reflect world price. That the subsidy benefits the rich instead of the poor, after all, small car and motorbike don’t use much petrol, but big cars like Mercedes and Perdana driven by the rich does. I also suggested the money saved, estimated to be RM4.1billion, be used to improve public transport in the country. It is heartening to see that there might be somebody in the policy department read my piece in an online publication and take it onboard.
No doubt that petrol price hike is inflationary, and it will eat a huge chunk of ordinary Malaysian’s pay packet, if they keep on using their car just to go to work or neighbourhood nasi lemak stall a couple of miles from home. But if everyone changed their habit, use public transport or bicycle for short distances, the decision to raise the petrol price would result in billions of ringgit saved from wastage. We would reasonably expect that after the price rise, people would economize and buy less petrol (in litre), so the amount of subsidy would also be less. For example if original amount of petrol consumed was 10million litres, with the price rise, the amount consumed can be expected to be less, say 8million litres, then a huge amount of saving is already made. For this theory to hold, the amount of price rise has to be big enough so that consumers would change their habit. If the price rises only by 2-3 sen every month, this might not hit consumers’ pocket too much that they wouldn’t change their habit. So the government decision to raise the petrol price by 30sen is correct. Hopefully Malaysian would use public transport and/or bicycle for a change.
Now considering the flow on secondary effect of prices of good and services that need to be transported to reach their market – food, household goods etc. My experience here, tells me that prices of food and other goods and services doesn’t increase, except bus fares. Firms in transport industry learn to improve their efficiency (less frequent but larger deliveries) or introduces surcharge for fuel component, like airfare ticket these days, there is a fuel surcharge in addition to fare price. Over time, Malaysians will realize sooner or later that their expectations that the price food and other goods will also rise is baseless.
What about The huge profits from Petronas? I would rather receive it in the form of cash dividend (as Malaysians we all have a share in this government company) rather let the profit be guzzled by Mercedes driving countrymen/women who demanded their petrol be subsidized. As I said previously, small car or motorbike don’t use much petrol, big cars do. Yes we read about their complaints, I suspect most of the are middle class, 2-3 car households and live in 2 storey house in the suburbs and well educated to be able to write eloquently in letter-to-editor columns, not bicycle riding like me.
Thursday, March 02, 2006
Title: Petrol Price Hike.