Petrol

If you have sauntered into a mamak stall lately, or perhaps waited for a bus at a bus stop, or been to practically any place where people are allowed to leisurely congregate, it would be nothing new to you that the price of petrol and diesel abruptly skyrocketed 41% and 68% respectively in a single day. With the potentially crippling implications of this increment, it is not shocking one bit that it has become the talk of the town. Those who were once ignorant and oblivious to their surroundings suddenly become increasingly aware of the events transpiring around them now. Shopping moms now check their wallets twice before deciding to buy them fattening tidbits for their kids. Anxious, fresh P license drivers don't get to take their parents' car out for a spin on the pretext of just driving around. Parents cut their teenage child's allowance by a quarter and discourage them from spending unnecessarily.

Explanation to the slow chumps: With the hike in price of diesel, prices of all goods are inevitably jacked up. Everytime goods are shipped; be it raw materials, work-in-progress, or finished goods, transport cost is added to the total cost, and if price of oil increases, so do the transport cost and of course, the total cost. And it is clear the profit margins of the suppliers,wholesalers, or any party which is involved with the movement of goods from the factory to the consumers will shrink, and it's only wishful thinking if we hope that these parties will absorb the full incidence of the increase. Long story short, it causes a ripple effect or a chain reaction or whatever you wanna call it.

Lets evaluate several points. First off, Malaysia is a net exporter of oil; meaning it exports more oil than it imports. If the supply of oil in this country is falling, the government can just export less oil to equilibrate the forces of domestic supply and demand at a lower price. One plausible reason for the price hike is that the ruling party members are just pocketing more of the government funds once used to subsidised domestic petrol and diesel.

Here's what I think, our dear sleepy PM was caught in a dilemma. Not long ago, rumors begin floating around that at least 30 MPs from the ruling party are gonna defect to the opposition party, which will lead to the ousting of the present government and the forming of a new one. Even before the General Elections, it was apparent that many MPs, especially from the east, were disgruntled over the rather salient fact that their states, Sabah and Sarawak in particular, are being neglected by the federal government. It is evident by the lack of development there despite the population there being majority bumiputras.

These two states have already been over 40 years removed from their assimilation into Malaysia and yet progress and advancements are near minimal.For an instance, Sabah is an oil producing state. As oil has a near zero elasticity, it should be common sense that Sabah should be generating lots of revenue and yet, after all these years, it's still in such a pitiful state with its citizens earning extremely meagre incomes. Regardless of how heartless the states' MPs may be, it would probably disconcert them to know that the states they lead are being left behind by the peninsular states and probably after long deliberation, these MPs see a more auspicious future with the opposition.

Our dear PM obviously knows that and the logical solution is to promise more development of these 'inferior' states and more 'under-the-table' money for the MPs to at least offset the defection of these MPs until he finds a more permanent solution. So as I was saying, the PM reduces the subsidies and willingly comes under fire from the public to ensure he will remain in power for the time being. And it's no mystery that many other MPs are already benefiting from swindling of government funds and to take care of these MPs interests along with the Sabah and Sarawak MPs, the government will need a bigger budget for these guys so cutting back on the petrol and diesel subsidies is the only action that has quite a substantial reason which is of course, rising global oil prices.

In spite of the furore already arising from the people, the petrol and diesel prices are steal set to increase another Ringgit or so, which will most certainly kill of the lower class income earners. People will become more desperate for money, food, anything and this will inevitably cause a spike in crime rates, which is one social issue that the government promised to mitigate not long ago. The police force is hopeless so this will mean the innocent citizens are the ones who are gonna suffer the brunt of this increase.

And it's clear that the effects of the hike in oil prices will plunge the whole country into dire straits and by the looks of it, things are just gonna get worse. All we can hope for now is that either the opposition coalition, Pakatan Rakyat overthrows the present oh-so-caring government soon or alternate fuel sources and methods to utilised them cheaply are discovered which is in my estimate, is not any time soon. So my advise before a log off, is too spend as much as you want now, drive to the places you want to, even if it's just behind your house, buy as many glasses of expresso as you want at the nearest Starbucks outlets while you still can because by the looks of things, prices are set to escalate even more, maybe to the point we can't afford it anymore.

Peace.