by Dr. Chen Man Hin
The latest jump in pump pricing by 42% has caused an upheaval in the economy and much unhappiness among motorists and the people. businesses are stalling, and there is undertainty about the future. the sudden severe rise has caused a social and economic earthquake.
The shocking increase was unnecesary, and here are the reasons why it was a bad mistake.
MARKED DISPARITY OF PUMP PRICES BETWEEN MALAYSIA AND OTHER OIL PRODUCING COUNTRIES.
Malaysia’s pump price should be equilvalent to pump prices in other oil producing countries, as for example:-
Saudi Arabia RM 0.38 per litre
UAE 1.19 / litre
Egypt 1.03 / litre
Bahrain 0.87
Qatar 0.68
Kuwait 0.67
Iran 0.35
Nigeria 0.32
Turkmenistan 0.25
Venezuela 0.16/litre
MALAYSIA 2.70/LITRE
COST OF PRODUCTION PER BARREL OF OIL
Statistics indicate that the production cost per barrel of oil for the above countries vary around US$ 4 per barrel. The world average is US$ 7 per barrel.
A barrel contains 44 gallons or 176 litres oil, which works out at US 2.27 cents per litre or 2.27 x 3.3 = 7.49 sen per litre.
As the production cost per litre is only 7.49 sen, it is beyond comprehension to see how the pump price could be raised astronomically to RM2.70 per litre.
There is no justification for pump price of petrol to be RM2.70 which is way above the price set in other oil producing countries in Middle East, Africa or South America.
This is an example of bad governance. Our natural resources should be used to help people and not to profit recklessly at their expense. Prime Minister Abdullah has a lot of explaining to do.
Petronas should be more transparent and be people frieidly.
Petronas is making huge sums of money. Tun Mahathir claims that Petronas made a profit of well over RM70 billion last year, and should therefore be able to keep down fuel prices instead of unreasonable price increases.
OIL PRODUCTION. Petronas produces 650,000 barrels of oil each day, out of which 250,000 barrels were for export and the balance of 450,000 barrels for domestic consumption.
At US$130 per barrel, less US$10 for production cost, profit per barrel would be US$120.
Estimated profit per year would be 250,000 x 120 x 365 x 3.3= RMR 36.1 billion
If we include profits from natural gas, investments in other countries, Petronas’s earnings would reach record levels.
PETRONAS WEALTH TO REDUCE SUFFERING OF THE PEOPLE INSTEAD OF RAISING OIL PRICES
The evidence is definitely against any increase of pump prices for Malaysians. Pump prices should return to a reasonable level – the same as in other oil producing countries.
Instead of spending money on subsidies for fuel, the funds should be used for the benefit of the people and marginalised poor with better schools, more hospitals for the sick and housing for the homeless.
PETRONAS TO REFORM
Since its inauguration in Parliament in mid seventies, its operations have been shrouded in secrecy. It is time for Petronas to be answerable to Parliament, to open its accounts to the people and to institute new policies for a healthy and vibrant industry.