No floor please...

I guess the title said it all.

I am against setting a floor price for petrol even if the average world crude oil prices fall below US$65 per barrel. Instead, I am for removal of the subsidy by stalling the announcement of revision of the petrol prices until such time when the fallen average prices fully eliminates the current 30 sen blanket subsidy petrol pump given.

Source: http://adsoftheworld.com/media/ambient/jobsintown_de_petrol_pump?size=_original

In other words, if average crude oil prices hovers between US$65 to US$70 per barrel and the 30 sen blanket subsidy reduces to say 10 sen, then we should keep the present RM2.15 even if it justifies the Government reducing to RM1.95 to maintain the 30 sen blanket subsidy.

However, if the average prices falls below US$65 per barrel and the real petrol pump prices without subsidy is at RM1.90 (if not lower), why should we keep it at a RM1.92 floor price? I don't see why it should turn into indirect taxes of 2 sen imposed on the rakyat by setting a floor price when global crude prices fall further below US$65 per barrel.

His argument that the public would not be wise in spending if the Government allows this essential item to be treated as a cheap product is a double talk as far as I see it. If the Government can tell the rakyat to buckle up when the petrol pump prices are revised upwards thereby implicitly credit the rakyat's ability to be prudent, why shouldn't the same implicit concept be assumed when the prices are falling? There are 2 reasons that Sharir should be aware of as Domestic Tade and Consumer Affairs Minister namely:

Firstly, the volatility in petrol prices would ensure the rakyat be aware that they now directly contribute to increasing petrol prices and the Government is not going to give them blanket subsidies like in the past hence some prudence on their part is needed.

Secondly, this is the golden opportunity for the Government to use the savings to implement proper public transportation system as well as channel it to developing other regions to take away the over-development activities in places like Klang Valley. This will slow further inter-state migrations and in the longer term, place less stress on existing public infrastructure, deferring things like building a 3rd lane to existing 2-lane carriageways because more people decided to live in suburbs near KL and PJ.

Source: http://mindacergas.wordpress.com/2007/06/11/smart-tunnel-and-kl-floods/

If the Government is genuinely concerned with the rakyat treating petrol as dirt cheap essential item, then impose a tranparent consumption taxes (like the 5% sales tax). I am sure it is easier for the rakyat to know how the Government price their probably "imprudent" spending behaviour. Or alternatively, give us the rakyat the formula and timely data (audited and checked by our Auditor General) to gauge for themselves how the pump petrol prices are derived. Unlike , I am are quite happy with itemised biling.

As for the RM2.70 petrol price ceiling, our outgoing PM only promised to keep it until 31 December 2008. Within the next 59 days, barring any sudden spike in average crude oil prices, I doubt this ceiling resolve will be tested and from 1 January 2009, the Government are not obliged to keep any ceiling prices.

The Government should see this as an opportunity as Shahrir said, to use the monies allocated for subsidies to instead direct to much needed development spending to build up our economy.

But no floor price please (or ceiling for that matter)...