Malaysians would consider it irresponsible and immoral for the Federal Government or any other party to earn RM 16 million a day at the people’s expense by merely manipulating petrol prices that does not reflect the plunging international price of oil which is currently at around USD 40 per barrel.
Since July 11 when a barrel of oil hit a record $147.27, oil has fallen 72% to USD 40.81 per barrel in less than five months, The expected economic recession following the global financial crisis has caused the drop in petrol prices to its lowest level in four years since December 2004. A front-page report in The Star estimated The Government is set to get windfall gains of up to RM 16 million per day based on crude oil price of US$44 per barrel and a consumption estimate of 27.5 million litres per day. This would work out to extraordinary gains of RM 6 billion a year at the expense of Malaysians. But for whose benefit?
At USD 44 per barrel, the market price for RON 97 grade petrol should be about RM1.30 per litre, which is 60 sen lower than the RM1.90 per litre which Malaysians are currently paying. If prices continue to plummet further from USD 44 per barrel to USD 30 per barrel, the extraordinary gains for the Federal government would be even higher than the RM 6 billion a year.
There is no doubt that the prices should be reviewed sharply downwards from RM 1.90 per liter which is too high. However, too low a petrol price would also encourage conspicuous consumption and wasteful spending. I would like to suggest that the government follow the previous historical band set in the past when the petrol price was fixed at RM 1.37 per liter when the price of oil was USD 38 per barrel on 01/05/04 to USD 1.42 per liter when the price of oil was USD 47 per barrel in 01/10/04.
At the same time, Finance Minister Datuk Seri Najib Tun Razak should fully account to the public how the windfall profits of at least RM 16 million or RM 6 billion a year would be spent for the public benefits. Malaysians have a right to expect that such a huge sum should not be used solely for the private benefit of the few but for all Malaysians.
Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad’s recent revelation that at US$65 (RM235) per barrel or at RM 2 per litre the Government will save more than RM 10 billion. With the price of oil now at USD 40, one can imagine how much larger the savings in fuel subsidies are to the extent that instead of paying lower fuel subsidies, the government can even make extraordinary gains. Fuel subsidies in October 2008 was RM 610 million, compared with RM 3 billion in May 2008 when oil prices peaked.
The people have a right to enjoy the tens of billions of fuel savings and extraordinary gains by the government as well as the record profits of Petronas with a record pre-tax profit of over RM 63 billion.in the six months ended Sept 30. Petronas’ cash, fund investments and other investments by rose by RM 23 billion to a total of RM 124.7 billion from a year ago, enough to pay off more than half the national debt of about RM 220 billion that comprises all government and private sector debts.