RON95/Diesel price increase: let me try again

Several people commented on my previous post on the petrol and diesel price increases in Malaysia. They said: “go back to the Netherlands,” “but the Dutch earn a lot more,” “why make comparisons,” “but the Dutch have minimum wages, social security system, etc.”

Essentially, they said I made false, incomplete or irrelevant comparisons.

Since some such comments were written by people whom I know are capable of thinking well, I felt compelled to review what I wrote.

I’ve concluded they responded as they did because I either didn’t make my points clearly or I assumed too much willingness on their part to try to connect the dots. I've decided to try again.

Fuel price comparisons

I mentioned the fuel price in the Netherlands because being there made me more sensitive to how much difference there is in fuel prices across the globe. If I had returned from Iran, I would have stated that petrol is virtually free there. So, the point is not the price in the Netherlands, the point is that all nations have to fix the price of fuel, taking into consideration many factors.

Consider the price of petrol and diesel in 9 countries in our region which foreigners often consider investing in. According to a source which I have not verified, this is the price-at-the-pump, in Euros in August 2013:

Petrol: China 1.25; Singapore 1.25; Cambodia 1.08; Thailand 0.95; India 0.92; Philippines 0.91; Vietnam 0.89; Indonesia 0.72; Malaysia 0.64.

Diesel: China 1.25; Singapore 0.95; Cambodia 0.92; Indonesia 0.80; Vietnam 0.77; Philippines 0.75; Thailand 0.72; India 0.65; Malaysia 0.53.

Does the following surprise you?

• The price of fuel in China, the world’s source of “cheap goods,” is about double that in Malaysia. In case you’re wondering, for the USA: petrol 0.71; diesel 0.77 (Euros).
• Despite the low price of fuel in Malaysia, we’re losing investment to the other countries.
• In some countries diesel isn’t cheaper than petrol.
  Again, a caveat: I’ve not verified the data, and I am concerned that it’s hard to find fresh local articles on this subject in on-line media. Am I wrong to expect reporters/journalists to consider the big picture and to do the verification?
• Thanks in part to the ‘low’ (!) price of fuel in China, the Chinese are abandoning their bicycles, while the Dutch with their expensive fuel, even cycle daily to work. (There are many reasons for this, fuel taxes and bicycle lanes are amongst them.)

Which countries subsidize fuel?

According to Wikipedia (i.e. unverified), the following 12 countries subsidize RON95 petrol: USA, Saudi Arabia, Iran, Egypt, Burma (sic), Malaysia, Kuwait, Bahrain, Trinidad and Tobago, Brunei and Bolivia.

Recall that the USA is widely considered not only a wasteful society, but also a society which shamelessly proclaims its ‘right’ to waste the earth’s resources. Recall also that the 11 other countries in the list are rarely considered models of good nation building.

Minimum wages & salary levels

In all the “discussion” I reviewed in the course of writing my essay, I couldn’t find a single media article which listed minimum wages and median incomes. I’ll leave you to speculate why.

Do you agree with the following?

• Just like the discussion of fuel prices, discussion of minimum wages should be multi-dimensional (‘nuanced’), not just “us versus them.”
• Not all nations with fuel more expensive than in Malaysia offer unemployment benefits, health care and retirement benefits.
• The imposition of Generalized Service Taxes (GST), price controls, the general level of income taxes, etc. should also be considered when discussing subsidies.

I was silent about higher wages and salaries in the Netherlands. My critics are silent about the higher deductions in the Netherlands for income taxes and welfare benefits.

Taxing fuel

I continue to be amazed that environmentalists aren’t applauding the removal of subsidies for fuel.

The money not spent (please don’t call it ‘savings’) on subsidies could be spent on reforestation, cleaning-up rivers, enforcing forestry laws, education to reduce pollution, etc.

Better yet, if we take bold steps to reduce fuel consumption, we will reduce the occurrence of incidents in extracting, refining and distributing petroleum; and we will leave more of our earth’s underground resources to future generations.

And let’s not kid ourselves. Only liars will say that increasing fuel prices will not increase the cost of living. When we raise the price of fuel, we must allow commercial users of fuel to raise prices – to avoid accidents and to avoid increasing pollution. We also have to make provision for those who will be pushed to the brink of poverty: regardless of what leaders of the government of the day say.

What I didn’t say

I didn’t say that I support the removal of subsidies at-the-pump at this time: yet most who excoriated me – no matter how ‘tenderly’ – assumed otherwise.

Am I wrong to point out that many nations have concluded that making fuel more expensive is actually a good thing and have learned to live with high fuel prices?

What was the purpose of my essay?

I wrote in order to point out:

• The famine of analysis in our nation and the ranting that passes for comment in our bipolar like/dislike, social-media world. 
• Those in “the opposition camp” seem too prone to analysing things by putting them into categories like ‘broken promises,’ ‘this hurts the poor,’ ‘this is bowing to foreign pressures,’ while those in government seem only capable of brushing things off. 
• If we don’t allow commercial users of fuel to raise prices, we will increase the incidence of accidents and pollution. 
• Those who are elected by the rakyat to represent the rakyat have given big businesses like IPP’s a bigger say than the rakyat in policy decisions.

Do we want an “opposition” which, when in government, refuses to impose or raise taxes?

The Civil Service and the Media

There was a time when we, like in many other nations today, trusted the Civil Service. Not only did wewant to hear what civil servants considered when they made policy decisions: they wanted to tell us. Also, the media was the means for distributing the (often long) message and to collect responses.

Dissemination of information was important, even if consent wasn’t always self-evident.

Not so anymore. Now we have ‘sealed agreements’ with IPP’s, the Official Secrets Act and arrogant elected representatives who don’t think the public need to participate in any decision making other than at the ballot box every few years.

And the media give us what we want: simple, 2 dimensional analyses which we can either like or dislike. And they make it easy for those who dislike what we say to tell us to leave the country.

In conclusion

This is the state of our nation today:

• We don’t care to ask what conditions must be satisfied before we agree to be responsible tenants of this earth, a people who are willing to enact restraints on those who use the earth’s limited resources.
• We don’t care to ask what those conditions are and when those conditions are to be satisfied.
• We don’t care that our government uses low fuel prices as a cover for many other wastes and leakages, even if it seems obvious to much of the rest of the world.

Posted by Ramanathan