## Friday, 6 June 2008

### What's in a barrel of oil? (Part 1)

OK, so... One barrel generally fills up to 42 US gallons. How many litres is that?
42 x 3.78541178 = 158.9873 = 159 litres

There is 159 litres of oil in a barrel. But not all of the oil are used in today's vehicles. What does a barrel of oil consists of? What are the elements?

1. Finished motor gasoline (51.4%)
2. Distillate fuel oil (15.3%)
3. Jet fuel (12.3%)
4. Still gas (5.4%)
5. Marketable coke (5.0%) [Ha??!! That's where Coke drink comes from?? I wonder...]
6. Residual fuel oil (3.3%)
7. Liquefied refinery gas (2.8%)
8. Asphalt and Road oil (1.7%)
9. Other refined products (1.5%)
10. Lubricants (0.9%)

Well, done with listing the elements, the current world crude oil price is at \$127.79, we'll take it as \$128 to ensure easy calculation. Before that, to un-scare the drinkers of Coke, marketable coke is coke that is relatively pure carbon and can be sold for use as fuel or for the manufacture of dry cells and electrodes. I'm sure you Chemists know about it already.

So, one barrel of oil in MYR is \$128 x RM3.26 (as of now) = RM417.28
Gasoline makes up 51.4% of the barrel, so...

(51.4/100) x RM417.28 = RM214.50

How many litres of gasoline in one barrel?

(51.4/100) x 159 = 81.7 litres

So, 1 litre of gasoline is... RM214.50/81.7 litres = RM2.63 on the world market.
Considering petrol is gasoline, the price of Malaysian fuel is RM2.70/litre, not to mention that Malaysia is a net oil exporter. Based on the CIA World Factbook, Malaysia oil exports are about 611,200 barrels/day (2004) and Malaysia oil imports are about 278,600 barrels/day (2004). If you guys can get the latest update on this, it'll be really helpful, so that it is more accurate and more up-to-date.

Now, taking only gasoline prices into account, the BN government is making a profit of RM0.07/litre (RM2.70-RM2.63). However, the price of crude oil can fluctuate anytime. So, if the price of crude oil goes down even further, the more profit they make and vice versa. This is just gasoline. What about the other elements within the barrel?

To jolt your minds, let's go back to December 31, 2007.

We take umbrage to Datuk Seri Najib Razak’s statement which was reported in the NST on 31 December 2007. He was quoted as saying, “The country will go bankrupt if the government reduces oil prices, which are sky-rocketing in the world market. It is not possible for the opposition to bring fuel prices down. It simply does not make sense...they are just trying to fool the people.

“We can use Petronas’ profits to reduce fuel prices, but only if we forego development projects like building schools and universities.”

I mean, guys! What's the credibility of Najib's statement that Malaysia would go bankrupt if they reduce oil prices? Where are the facts and figures?

Facts and figures are far more persuasive in convincing people to accept the line of argument that Najib is promoting. Mere rhetoric will not persuade people to believe that “the country will go bankrupt” if the opposition were to reduce fuel prices when they form the government.

What is Najib’s basis in claiming that “the country will go bankrupt”? Why should it go bankrupt? How does he come to this conclusion?

Najib should table Petronas’ detailed accounts in parliament to substantiate his claim. He owes a duty to Malaysians to provide the detailed accounts so that the people can be convinced that he is justified in claiming that the “the country will go bankrupt”. In the absence of the detailed accounts, Malaysians have a right to dismiss his claim as an extreme exaggeration of a politician who is unable to counter an argument with truth.

When we talk of Petronas’ revenue we are talking about the income generated by our national assets. Our national wealth must be accounted for in a transparent manner. We need to know how much is earned by Petronas and we know in detail how this acquired wealth is being managed and spent. We need to know how much those in the ranks of hierarchy are being paid and how they are rewarded. What kinds of bonuses do they receive? How much is their gratuity when they retire?

This and much more have to be answered honestly.

Why must the earnings and accounts of Petronas be kept away from Malaysians? Why is parliamentary scrutiny into the accounts denied? What is the problem? Does this information fall under the ambit of “national security” that it cannot be divulged? Why should the Prime Minister alone be privy to the details of how this colossal wealth is being managed?

If answers to all these cannot be made public, then Najib should stop fooling the people.

If Parliament cannot exert its authority to demand that the accounts of Petronas be tabled for scrutiny by the elected members of Parliament, then it should stop pretending to be the legislative authority of the Federation. To safeguard its own image “as the source of governmental energy and the seat of national power”, Parliament must act “as the main channel of democratic impulses”. It shouldn’t play a subservient role to the executive and be seen and accepted as doing the biddings of the executive. It shouldn't strengthen the hand of the government by surrendering its own authority to the executive through insidious legislation.

Najib's statement that “we can use Petronas’ profits to reduce fuel prices, but only if we forego development projects like building schools and universities” cannot be taken seriously. This must be a derisive comment. If indeed the profits were used for developmental purposes like building schools, can Najib please explain why 1,555 national schools in the rural areas are without toilet facilities and 794 schools are without electricity as revealed by the Minister of Education last year?

Would the cost of providing such basic amenities to these schools run into billions of ringgit making it impossible to achieve all these years? Does it mean that Petronas has not made that kind of profit all these years to provide such facilities to the poor pupils in rural areas? How can Najib justify such cruel and callous neglect of the most deserving people in the rural areas in a country that is richly endowed with wealth and the means to rectify such deprivation?

It is a widely held belief that the absence of accountability and transparency over the income and expenditure of Petronas has led to an unbelievable squandering and plundering of the nation’s wealth.

(TO BE CONTINUED)...

K said...

What do you guys use for heating over there. Here in the U.S. some of our residents use oil for heating purposes. They end up paying anywhere from \$3,000 - \$5,000 just to fill their tanks. I think that's pretty harsh. But maybe you guys have B5 oil over there. I honestly don't know if you do. But it's really good. I learned about it while working for NORA. It helps keep the environment clean. It produces NO greenhouse gases, reduces emissions, and the most important part, it helps CONSERVE 400 MILLION gallons of oil. Check it out here: http://oilheatamerica.com/index.mv?screen=bioheat

Thanks for the feedback, k. It's a really useful info to share with.

Syed Marwan said...