So rarely do I talk about current issues here. But there are things that stunned me. This is one.
Price rise is a normal thing. It is called inflation. Inflation, in lay terms, means the increment of price. Things that used to be 1 ringgit back then, now cost 1 ringgit and, say, 20 sen. In a different way of seeing it, inflation is the reduction of buying power. Probably RM 50 is enough for you to treat your family to a luxurious seafood dinner those days, but now RM 50 will buy you a standard nasi goreng something meal and a fruit juice for each one, no more.
In Malaysia, we have something called subsidy. It is the money that government spend on daily products so that the rakyat spends less on those items. Malaysian government subsidizes almost everything, gasoline, diesel, rice, oil, sugar, God knows what else. But there are disadvantages of this subsidy thingy.
And when the prices go up (I mean the original price of the goods, not the price sold to the rakyat) the government had to pay more to subsidize the rakyat.
Only around two years ago, economists said it is impossible to imagine crude oil price to go beyond 90 US dollars per barrel. Now, it hits an insane US$ 135. Why? OK, back to the inflation discussion. Prices go up when demand exceeds supply. This makcik makes damn good karipap, she makes only 10 everyday, 'cause she has only ten loyal buyers who would buy only one everyday. Next day, word of mouth spreads, and now she has fifteen customers willing to pay for her karipap. She couldn't make more, she could only afford to make ten. Assuming she is a very neutral granny who won't care much about her customers' loyalty and only cares about business, she would increase the price so that only the affordable could buy her karipap.
OK that was a horrible analogy, but I believe everyone knows how inflation is caused. Thing is, this oil price increase is not caused by that natural inflation effect. I don't know how oil could go US$ 135 per barrel like that. I'm not an economy genius, I'm not even a petroleum engineering student. I don't know how the hell it got that expensive.
But now that it is, the government is having a real pain in the ass paying the subsidy. The scale is in billions. So, real unfortunate for the rakyat, the government just had raise the price. Gasoline and diesel. The yearly budget spends a fixed number on fuel subsidy, and now that the oil price had increased, the fuel price the rakyat is paying had to be increased, too, so that the subsidy remains fixed.
By the stroke of midnight (around now) the gasoline price will be RM 2.70, from the previous RM 1.92. A significant rise. Probably, I would say, the highest increment of gasoline price Malaysia had experienced, as far as my memory serves. I heard the rumors a day earlier, from my friend, who told me his girlfriend told him. I quickly went to a Shell station (I wanted V-Power Racing, 'cause it gives me more mileage, but the station did not have it) and filled RM 50. The next morning, my friend said there was no price increase. I was going like, "Damn your girlfriend!" but later astonished by what I saw today and thanked his girlfriend, indirectly.
Cars and lorries were queuing like traffic jams to all gas stations. I've never seen a scene like this. All the times when there were sugar shortage, cooking oil shortage, even gasoline price increase before this, I've never actually seen the widespread panic with my own eyes. Today I've witnessed it. To be honest, it was horrifying to me. It is like war to me. The time when suddenly everything is in shortage or everything is or will be expensive. Everyone has money, but the purchase power is drastically decreasing.
I think, oil price increase can be one of the biggest cause of inflation. Daily commodities can go up by 10 or 20 sen, and even if it sounds tiny, it could have a huge impact. For me, car users, the effect is even larger. It directly affects me. Using fuel saving devices are no longer relevant (although I never believed in any). Efficient driving is more relevant. No more 160 km/h, now obey the speed limits, not because of safety, but because of economy. Winding down the windows is more economical than air-cond. Things like these now have to be considered.
It hits my dad even harder. My dad runs a logistic company. The simple description I would tell people about my dad's job is he supplies trucks and lorries to the port for stuffs to be transported to the warehouses. Now the diesel price had risen an astonishing RM 1, it surely cost my dad to the degree of probably millions per year.
When the country went through the economic slump long ago, I was too young to notice anything. I still had good food and I still go to school even though I know my dad went unemployed up to four months. I won't say this gasoline and diesel price increase would cause a similar slump, but that's what I imagined when I saw the long queue.
I've lived a life a bit too comfortable. I supposed it is good when reality slaps you once in a while. Hey, Singapore pays more than RM 5 per liter of their gasoline. We should still be thankful.
But damn its painful. Why can't you increase 10 sen per week until it's RM 3? That would feel much less painful, haha.
Hey maybe my butanol plant should start construction now.
Price rise is a normal thing. It is called inflation. Inflation, in lay terms, means the increment of price. Things that used to be 1 ringgit back then, now cost 1 ringgit and, say, 20 sen. In a different way of seeing it, inflation is the reduction of buying power. Probably RM 50 is enough for you to treat your family to a luxurious seafood dinner those days, but now RM 50 will buy you a standard nasi goreng something meal and a fruit juice for each one, no more.
In Malaysia, we have something called subsidy. It is the money that government spend on daily products so that the rakyat spends less on those items. Malaysian government subsidizes almost everything, gasoline, diesel, rice, oil, sugar, God knows what else. But there are disadvantages of this subsidy thingy.
And when the prices go up (I mean the original price of the goods, not the price sold to the rakyat) the government had to pay more to subsidize the rakyat.
Only around two years ago, economists said it is impossible to imagine crude oil price to go beyond 90 US dollars per barrel. Now, it hits an insane US$ 135. Why? OK, back to the inflation discussion. Prices go up when demand exceeds supply. This makcik makes damn good karipap, she makes only 10 everyday, 'cause she has only ten loyal buyers who would buy only one everyday. Next day, word of mouth spreads, and now she has fifteen customers willing to pay for her karipap. She couldn't make more, she could only afford to make ten. Assuming she is a very neutral granny who won't care much about her customers' loyalty and only cares about business, she would increase the price so that only the affordable could buy her karipap.
OK that was a horrible analogy, but I believe everyone knows how inflation is caused. Thing is, this oil price increase is not caused by that natural inflation effect. I don't know how oil could go US$ 135 per barrel like that. I'm not an economy genius, I'm not even a petroleum engineering student. I don't know how the hell it got that expensive.
But now that it is, the government is having a real pain in the ass paying the subsidy. The scale is in billions. So, real unfortunate for the rakyat, the government just had raise the price. Gasoline and diesel. The yearly budget spends a fixed number on fuel subsidy, and now that the oil price had increased, the fuel price the rakyat is paying had to be increased, too, so that the subsidy remains fixed.
By the stroke of midnight (around now) the gasoline price will be RM 2.70, from the previous RM 1.92. A significant rise. Probably, I would say, the highest increment of gasoline price Malaysia had experienced, as far as my memory serves. I heard the rumors a day earlier, from my friend, who told me his girlfriend told him. I quickly went to a Shell station (I wanted V-Power Racing, 'cause it gives me more mileage, but the station did not have it) and filled RM 50. The next morning, my friend said there was no price increase. I was going like, "Damn your girlfriend!" but later astonished by what I saw today and thanked his girlfriend, indirectly.
Cars and lorries were queuing like traffic jams to all gas stations. I've never seen a scene like this. All the times when there were sugar shortage, cooking oil shortage, even gasoline price increase before this, I've never actually seen the widespread panic with my own eyes. Today I've witnessed it. To be honest, it was horrifying to me. It is like war to me. The time when suddenly everything is in shortage or everything is or will be expensive. Everyone has money, but the purchase power is drastically decreasing.
I think, oil price increase can be one of the biggest cause of inflation. Daily commodities can go up by 10 or 20 sen, and even if it sounds tiny, it could have a huge impact. For me, car users, the effect is even larger. It directly affects me. Using fuel saving devices are no longer relevant (although I never believed in any). Efficient driving is more relevant. No more 160 km/h, now obey the speed limits, not because of safety, but because of economy. Winding down the windows is more economical than air-cond. Things like these now have to be considered.
It hits my dad even harder. My dad runs a logistic company. The simple description I would tell people about my dad's job is he supplies trucks and lorries to the port for stuffs to be transported to the warehouses. Now the diesel price had risen an astonishing RM 1, it surely cost my dad to the degree of probably millions per year.
When the country went through the economic slump long ago, I was too young to notice anything. I still had good food and I still go to school even though I know my dad went unemployed up to four months. I won't say this gasoline and diesel price increase would cause a similar slump, but that's what I imagined when I saw the long queue.
I've lived a life a bit too comfortable. I supposed it is good when reality slaps you once in a while. Hey, Singapore pays more than RM 5 per liter of their gasoline. We should still be thankful.
But damn its painful. Why can't you increase 10 sen per week until it's RM 3? That would feel much less painful, haha.
Hey maybe my butanol plant should start construction now.
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