Yes dears...I'm talking about the energy crunch.
In this region, Malaysia has the lowest petrol price after Brunei. Coutries with the lowest prices are in the Arab and African region. Although that's the case, Brunei is also contemplating to increase the prices becaus the government is starting to feel the crunch. Currently they are spending around B$500 mil for petrol subsidies. That translates to some RM 1.5 bil-ish (that's only a fraction of what our government spends for petrol subsidies).
But whatever the price of petrol may be, I strongly disagree that it should be cheaper for us. Namely because of environmental reasons. The government should be smarter. It's high time they put Environment high on their priority list. Yes, we are still a carbon sink, but till when will that last?
Renewable Energy efforts are difficult to push in this country for the very reason that fossil fuels are extremely cheapo. This includes electricity, because it comes from gas. At the rate that we are going it is said that we'll become a NET IMPORTER by 2015...yikes. You know what that means? Your good ol' national O&G company will have to buy oil and gas from others and however much that they've been contributing to the government (monetarily) will be greatly reduced. Oh yes, and did you know that Taiwan pays the same for electricity yet it is NOT subsidized? hmmm...what's wrong with the picture here?
Perhaps the government should gradually decrease the subsidies and divert it into beefing up public transportation or education or health care etc. Or perhaps, start a feed-in tariff (similar to Germany). What it means is that, if you buy a solar system for your residential or office, you EARN money for every kwh that you don't get from the grid.
heh...to TNBans out there, better watch out. If solar takes off, you could 1) lose business and 2)forced to pay the feed-in tariff.
Tuesday, March 18, 2008
Feeling the crunch yet?
Posted by ummi sa'eed at 9:55 AM
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2 comments:
quank quank, a good reminder to hubby is it? =)
Hah! Found your blog!
I took Economics for 'A' Levels and had to read a long essay on road pricing. In a perfect world, prices reflect the true costs of things, and hence consumers will make optimal spending decisions based on what they could afford. Things that are scarce will be expensive and people consume less of these things; things that are plentiful will be cheap and consumption will be high. However, when prices are artificially lowered, this mechanism become distorted; things that are actually scarce are made to be cheap and people consume more of these things when they shouldn't. So the essay was saying that motorists should be made to pay to drive on roads because of all the costs associated with motoring: pollution, noise, congestion, etc.
In Malaysia, the price of petrol is artificially low. The government wants to lower the cost of living by subsidizing the cost of petrol. An unfortunate side effect of this is that many people are driving when in fact they shouldn't. By right additional taxes should be levied upon petroleum to reflect the environmental costs of its usage.
The obvious solution is to drastically improve the public transportation system while discouraging people from driving to work. But it's a chicken-and-egg situation: the relatively low cost of fuel means that people are not desperately clamoring for public transport. So a clever plan needs to be devised to get people to switch to public transport while not creating too much hardship for people by removing petroleum subsidies in one shot. Also, politically, no party wants to be seen as the bad guy. So, another part of the solution is to find ways to lower the cost of living other than via petrol subsidies.
The issue is straightforward - that artificially lowering the price of petroleum creates more problems than it solves - but the solution is complex due to the interplay of politics, development, infrastructure, and welfare economics.
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