Friday, 6 June 2008
UAE — RM1.19 seliter
Venezuela — RM0.16 seliter
Nigeria — RM0.32 seliter
Arab Saudi — RM0.38 seliter
Mesir — RM1.03 seliter
Kuwait — RM0.67 seliter
Brunei — RM2.03 seliter
Malaysia — RM2.70 seliter
I think the government thinks that we, the Rakyat, are so stupid that they compared prices with countries who are net oil importers. Some of the Rakyat didn't realise that. We must never be made stupid again by the government's propaganda.
By WONG SAI WAN
KUALA LUMPUR: Petronas will go bust within 10 years if all its profits are handed to the Government to continue subsidising fuel, said its president and chief executive officer Tan Sri Hassan Marican.
He warned that many national petroleum companies in the world have ceased to exist or were in financial trouble today because all their profits were taken away from them.
Speaking at a special briefing on Petronas’ contribution to the country, Hassan said that in the oil business it was important to reinvest profits in search of new technologies, reserves and continued revenue. Petronas has so far reinvested RM178.9bil of its profits.
“Petronas has played a major role by giving back a substantial amount of its profits to the Government,” he added.
At the close of its financial year in March last year, the national petroleum company had given the Government RM52.3bil in taxes, royalties and dividends which worked out to be 32% of the Federal Government’s revenue.
“Since the formation of Petronas in 1974 to last year, the company gave the Government RM335.7bil out of a total profit of RM570bil,” Hassan said.
Commenting on the fuel price increase, the Petronas boss said the corporation did not make a sen from the increase.
“All the oil companies get full market price for the petrol and diesel that they sell and the Government pay them the difference from the fixed price. This is where the subsidy comes into play,” he added.
Hassan revealed that oil companies operating in the country spent RM40bil a year in drilling and exploration works and a lot of this money was injected into the local economy.
Hassan also pointed out that it was now more expensive for Petronas to explore and extract oil.
“A lot of focus is placed on the high oil prices. There is very little talk about costs. The costs to explore and to drill for oil have increased by about 200% over the past three years.”
Hassan said Exxon Mobil made about US$40bil (RM130.31bil) last year, an increase of only US$1bil (RM3.26bil) from 2006, in an environment of higher crude oil prices.
“That is the world’s biggest, most efficient and most well-run oil company. Margins have eroded,” he said.
Hassan said Petronas was now “ scraping the bottom of the barrel” as far as finding and extracting oil was concerned.
Asked about criticisms that Petronas' accounts and profits were not transparent, Hassan said the corporation published a very detailed annual report which was deposited in the Parliament library.
“For all intents and purposes, Petronas is a public-listed company because we are rated by agencies like Standard and Poors, and Moody. We do not hide anything,” he added.
Now, Hassan says that Petronas is a public-listed company. If it is a public-listed company, how come the accounts are actually reported to only one man, which is the PM? And why was it not revealed enough to the public? Just making statements about the figures without showing the actual accounts can be quite misleading.OK lah, to be fair, at least he gave figures for us to mull over. Such as the cost of drilling increasing by 200% in the last 3 years. Also, the annual report can be found in the Parliament library. Guys, shall we go for another Parliament trip? To check the accounts? And see whether they are bullshitting or telling the truth...
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)...
There are advantages and disadvantages of raising the price of oil. On 5th of June 2008, 12.00a.m., the BN government has raised the petrol price from RM1.92 to RM2.70, a 78 sen increase. Before the raise, Malaysia have the cheapest petrol price in the ASEAN region, followed by the likes of Indonesia, Brunei, Thailand and Singapore (if I'm not mistaken). Now, at the price of RM2.70, we are behind Indonesia and Brunei but still ahead of Thailand and Singapore in the cheapest petrol category for ASEAN. I have no idea about the petrol prices in other ASEAN countries such as Vietnam, Cambodia, Myanmar, Laos and Timor Leste. So, I'm just singling out the notable countries.
So, below are the advantages and disadvantages of having the petrol price raised from my point of view:
1. Oil's getting scarce and they are the reason for global warming as carbon emission from cars absorbs (is it the right word) into the atmosphere and caused the ozone layer to be thinner. However, that's not the only factor. The excess deforestation also causes the Earth to heat up and enables the UV ray to reach the ground. So, raising petrol prices are good for efforts to reduce global warming and to encourage people to take public transport to travel to work. However, since the 30 sen rise in petrol price last time around, do we see any improvements in public transport by the government? Only those riding buses, taxis and LRTs can evaluate. I myself haven't ridden a public transport since these few years. Did anyone thought of riding a bicycle to work? Save fuel...
2. Well, by raising the petrol price, it can encourage people to modify their lifestyle into a better lifestyle than before. Smokers especially, will be hit badly if their work income is low and they own a car. Having a motorcycle is not that bad but bad budgeting could lead to a cash-flow crisis. Therefore, it can at least curb some of the smokers' bad habit of smoking. However, the petrol price will really hit the poor people whose budgets are really tight even with the petrol price at RM1.92. The poor gets poorer. However, at least the target is on the richer people, who had been enjoying the same "subsidies" as the poor people that I have mentioned. They will feel a bit of pinch by the petrol price.
3. Higher petrol prices mean more government revenue. This extra revenue can be used towards helping the development of the country and the well-beings of the people, as long the leaders are not corrupted. But in Malaysia's case, we might not have the slightest idea whether the BN government will channel the extra RM56 billion to development for the people. We all knew about PM and his son-in-law, Khairy. Projects were privatised, means more rewards for the cronies. Oh well, let the karma law do its work on those who are unfair towards the other. If justice is blind in this world, then justice won't be blind when we reach the court of God in the world hereafter. I hear people say that the extra money means more going into cronies, corruption and white elephant projects. Sounds like political survival to me. And I forgot one thing from this view, the Malaysian DPM said back in May 31st that the petrol prices are not going to go up at all, even by 40 sen. Also, he asked us not to believe the rumour which is baseless. Well, 99% of rumours in Malaysia is true while the other 1% might probably be true too. This statement proves it at midnight, June 5th. Boom! 78 sen increase. Just like that. Boy, we Malaysians are really rumour-conscious, and it always turned out to be true.
4. Raising petrol prices show that we live in the so-called comfort zone for too long. Pampered by "subsidies", we were always angry each time the government raises the petrol price. Then, it recedes. I mean, are we supposed to be angry at the petrol price in the first place. If we want to be angry, be angry at the right things. Such as, why didn't we pressure the PM to reveal the Petronas accounts to show where the revenue goes? Also, why the PM didn't stick to the promise that they won't raise petrol prices? This may cause more distrust among the citizens toward the PM, who is expected to resign this December and hand over the post to Najib. That is, if Anwar manage to take over the federal government with enough defects between now and December. Now, this raise in petrol price taught us a lesson in a way. Finance is always important and planning the finance carefully may enable us to adapt to any worst case scenario, such as the increase in petrol price as it happens.
5. Raising petrol prices may cause a big change in spending behaviour of consumers. It will cause them to save even further and not spend money on unnecessary goods. Saving is one thing, but what will happen to the money flow if expenditures stop? We might see another repeat of the financial crisis in the 1980's as people are afraid to spend so much money in an unstable economy. This rise in petrol price will surely cause other necessities to go up in price. As Bank Negara claims that the inflation rate of Malaysia is in single-digit figures, they might have to think again. I'm sure we must be aware of the subprime mortgage market in the US that is pulling down the world economy. So, if there is no control on world food prices, we might see more starvation of the people, estimated another 1,000,000,000 people would starve as a result of this spiralling food price.
Well, that's it for now. If there is more analysis to come, I'll continue when I have the time. What's your comments guys? I really appreciate your views.