Bencana Lebih Merbahaya Daripada Serangan Jepun, Chin Peng, Zakir Naik, Mufti Bo-Tol Bakal Menimpa Negara

I hope that there will be readers here who recall my frequent warnings from years ago (before 2014) about the oil industry, the possible crash of oil prices, that oil was a sunset industry and so on. Yes I did sound boring. But it did happen.

Two things have happened.

1. Oil prices have "crashed" permanently. They will never rebound to sky high levels again. If Iran shoots missiles oil prices may spike but it will come down again.  Oil as a component of fuel or energy will remain for some time but not at astronomical cost or without alternatives. Ordinary human beings like us come into direct contact with oil prices (petrol, diesel) at the gas station or petrol station or stesen pam minyak - for our motor vehicles. With hybrids and EVs that may change drastically. 

2.  While oil prices have "crashed" the cost of producing a barrel of oil have not "crashed".  To produce a barrel of oil the oil and gas industry basically needs steel. Steel pipes, steel derricks, steel drilling rigs, oil tankers made of steel etc. Plus heavy engineering equipment - the prices of which keep going up. This is because there is always a high demand for steel and engineering equipment. With or without the oil industry the human consumption (and hence the costs) of steel and heavy engineering equipment will keep going up.  

Put 1 and 2 above together and it means that the profit margins in the oil industry will be squeezed very tightly. As is happening already. Oil companies will not generate profits all the time.

Here is another huge threat hanging over our other major source of export revenue - the golden crop or palm oil.

After China and India the EU is the third largest buyer of our palm oil. 

Malaysia sells over 2.0 million tonnes of palm oil to the EU each year.  

Of this amount over 600,000 tonnes (about 30%) goes into making biofuel.  

The EU buys over 9.0 million tonnes of palm oil in total.

The balance coming from Indonesia.

Come 2020 the EU is poised to ban the use of palm oil as feedstock for making bio-fuel.  

Some analysts say this would be the first step towards banning palm oil outright.

An Iceland supermarket says it will not use palm oil in its own- brand goods.

Considering that Malaysia produces about 16 million tonnes of palm oil, the EU buys over 12% of our output.

If the EU stops buying palm oil (for bio-fuel) it will send palm oil prices crashing - all over the world.

Perhaps that is why Sime Darby has seen it fit to sell 14,000 - 17,000 acres of plantation lands so far. Sime Darby does not see a future in palm oil anymore.  

The price of oil palm plantation land will also come crashing. 

The news was Sime sold plantation land at about RM250,000 per acre. 

This will likely dip even further.

If plantation land dips, the prices of land in general will dip - throughout the country. 

Oil palms and palm oil are very intertwined into the Malaysian economy.  

The economic linkages are wide and intricate.

Not just Felda farmers will become even poorer, but what about our export earnings?

The Ringgit will slide more.  

What about our palm oil mills, refiners, manufacturers of oil palm milling equipment.  

What about all the jobs that will be lost? 

The EU ban is supposed to take place in 2020. 

That is just over three months away. 

Or slightly into 2020.   

Even Theresa drinking two mugs of palm oil 

a day will not solve the problem.

We need immediate short term and long term solutions. 

For the short term Malaysia must work closely with Indonesia. 

Malaysia and Indonesia may have no choice but to ban imports of European goods. Tit for tat. It is going to be a trade war. Can YB Theresa speak Bahasa Indonesia?

Sime Darby may lose their BMW franchise ?? 

Mercedes cannot sell their cars here? 

For the long term - we have to be less dependent on exports of plain palm oil. We should really develop downstream, value added processing.  Lets not just make the stearines, glycerines, etc from palm oil but we must use it to make world class ice creams, biscuits, cakes, cookies and export these value added products to China, India, Africa. Lets decouple ourselves from or reduce our dependence on European imports.

There is not enough thinking or follow up action being done by the government and certainly not by the Cabinet. When the EU bans palm oil for bio-fuel, we are going to suffer. And it will begin in 2020. 

We should be relooking our future now.

That mufti Bo-Tol's  'Buy non Muslim last', 'mel_ncap guna minyak sawit' will only make things worse.

The country does not need fools.

The country needs thinking and solutions.