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News Clipping On Petrol Hike Changes Demand And Suppy

News No1

Daily Express Friday, November 23, 2007

Costlier petrol, gas certain
Kuala Lumpur: Given the rising expectations of a looming cut in fuel subsidies, Malaysians generally have come to terms with the fact that they have to pay higher prices for petrol and gas next year.
With skyrocketing crude oil prices threatening to breach US$100 (RM330) per barrel, the Government has indicated that it can no longer bear the huge burden of dishing out fuel subsidies estimated to balloon to over RM35 billion this year.
Malaysians realise they need to alter their household spending and lifestyle to make adjustments to a new gas and fuel price regime soon as the current price levels will likely stay only until year-end.
However, some are asking for fairness and transparency in the energy pricing mechanism to set the new fuel prices.
"I will have to either cut or forego non-essential stuff like dining out and expensive Astro packages," said Shahrul Izzan, a father of four who will have to incur a higher fuel bill next year due to his oil-guzzling multipurpose vehicle.
"I am prepared to pay more for petrol but I don't see the rationale of a two-tier pricing system for petroleum products as proposed."
A two-tier pricing system for petroleum products for the rich & poor is one of the many proposals being considered by the Government.
"There is no effective way of implementing it. How can anyone differentiate a person's income level at the pump?" asked Shahrul.
Dr Yeah Kim Leng, chief economist at RAM Holdings, concurred. "From the welfare perspective, those who can bear the higher cost should be asked to pay more, but a two-tier or three-tier pricing could lead to abuse and leakage. It's better to give rebates to motorcyclists."
He felt that fuel subsidies should be reduced to the extent that domestic petrol and gas prices resemble that of international prices and individuals should then be given the freedom to consume the amount they can afford.
"Allow fuel...