Will the mechanism work?
The government has decided to end the
subsidy of oil, thus increasing the price of oil almost 30 percents. The
rationale given is more like an excuse rather than reason to cope with the
increase of global oil price. Somewhat funny when this country produce its own
oil and export it for a more mutual benefit.
The idea is to sell the high quality oil
to other countries so we can buy cheap oil from somewhere else.
Question 1: how much is the price per barrel sold by PETRONAS to the importer countries?
Question 2: how much do we buy the oil per barrel from other countries?
Question 3: how much profit PETRONAS makes from buying and selling this oil?
Question 4: How much money did the government get from the profit and levy and taxes to PETRONAS to import and export this oil?
These questions does not really matter because, nobody bothers to answer it anyway.
The second rationale is even more stupid, when they say the price has to be increase by taking away the subsidy so that people from our neighbourhood county won’t be able to buy subsidized oil. Just because 40 Siamese bought oil in Perlis, the whole 28 million people in Malaysia have to suffer?
The best part is the government has come out with a solution to cushion the impact of oil increase and they dare call it mechanism. Let us look at the mechanism and see if it really works. But before that let’s look at some of the benefit of ridding subsidies on oils.
First benefit is when all these subsidies are taken away; the retail cost of fuel will increase. In this case the price of petrol is now at RM2.70, instead of 1.97, a dramatic increase of 78 cents or almost 30 percents. Diesel increases by a ringgit for every litre, even more dramatic to manufacturing operators, who happen to produce product for the people.
So what happens when the price increase?
The direct action, people will look for substitute of oil for their cars or industry, which in this case is NONE? Some industry however will look for low grade material; most will not because changing of fuel will mean changing in their production process or changing technologies. So how do they cope with the increase of oil?
Yes, correct
they increase their price of product or service.
TNB increases their tariff not even 24 hours after the announcement were made. How efficient.
By the way, what is the cost of oil? A part of the retail price, the price of oil also includes what we call unaccounted cost, of the external cost. These for example if you include the tax subsidies, are the cost of taxpayers protecting the oil supplies (tax payers have to pay more so government can use their money to subsidize petrol), then we have the environmental and health cost and so on and so forth.
When the subsidies are taken away, it will create a positive domino effect. The tax will decrease and the world will be a better place when more and more people stop using petrol and live healthily. This will decrease what we call the hardest cost element to quantify, but potentially important, the environment and health cost associated with pollution and global warming (Wahl, J. B, 2006)
People will walk more, exercise more, and take public transport more often, people will car pool, less traffic jam, they will spend more time at home and we will have a better environment.
Example of ways to ease ourselves on price increase of oil can be read here.
Beautiful???
Beautiful isn’t it?
That’s the positive domino effect, let see the negative ones.
Logically speaking without taking into consideration all those hard to understand economics concept and terms, what would happen when we increase the price of important material (In this case taking away subsidy, and the material is oil)
Oil increase of transport / product manufacturing for example electricity and anyà increase ofà increase in price of consumer product àindustrial product - increase in interestà decrease of saving àconsumer consumption and spending à workers and union demand higher salary à increase of lending rate àrate no product in theà increase in consumer spending àincrease in consumer product to much money in the economy, butàmarket because government control the price àno product to purchase
Bla bla bla spiral increase blab la bla.
Yeahhhhhhhh, we have inflations!!!!!!!!!
Tepuk tangan.
Hopefully not lah kan,
so the government come out with a remedy, or what they call it a mechanism to control this.
How, by giving out cash to those who buy petroleum. Easiest rationale behind this is if the money is being pumped to the economy it will create higher consumption and greater K-effect or the multiplier effect. If the money is given directly to PETRONAS, the K effect is not that great.
K-Effect is not the effect Datuk K has towards Siti Nurhaliza oke!
Instead of paying single subsidy to PETRONAS and making PETRONAS staff very happy, they give back the money to the rakyat, but using money order some more.
Instead of having to pay to one pay master, now we government have to pay extra on the money order service, yeah more money to POS Malaysia and extra documentation for the JPJs, and each increase of service charge from JPJs.
Instead of making things easy buy just paying to one pay master, now many organizations have to be involved. The PETRONAS, because there are still 30 cent subsidy they said, more documentation work for the JPJs officer to ensure that the claim is genuine, the POS Malaysia and their postman working extra making sure hundred and hundred thousands of car owner get their money on time. You know what happen when people did not get their money on time. They get very upset, and they vote for the opposition.
So much work one ah??
Good more work for the people in POS Malaysia and JPJ (this is an example of a K-effect)
Beautiful???
Beautiful isn’t it??
Now let’s look at the direct effect to the people and see who will benefit using this so called new “out of the box” mechanism suggested by some government think tank brainiac.
For those who have car with a cc less than 2000, they will get around RM600 rebate.
For those who have bigger care, they will have less;
Motorcyclist will get around RM150 ringgit.
Sorry for those mat rempit who do not have road tax, you will not get anything, so you have to rempit using the unsubsidized oil price. The willy and wikang will worth more now, than your nyawa.
Will anyone benefit from this price increase, and will the mechanism works?
Is orang miskin who have 1 car below 2000 cc will benefit more than an orang kaya with 5 below 2000 cc cars, and 2 more than 2000 cc cars?
Will those orang miskin who have no cars will get /merasa the country’s wealth from oil if they don’t have cars, and instead they have to pay for the rise of public transport charges?
The school children who do not own any cars, but their parents have to fork our more money for school bus fare.
Will everyone find 20 years old scrap metal old car and renew the road tax just to get the rm600 rebate yearly, although they did not use the car at all, and never consume oil, but instead buat reban ayam??
Is the orang miskin will benefit from the price increase, although the reason for giving out subsidy in the first place is to ensure that consumer price can be controlled.
Why do you take the money from rich people tax payer to pay for oil subsidy, and then give back to them in other form which is very hard to control, and instead of controlling the consumer price, now they (the orang miskin) have to pay more to eat.
Do you have a control mechanism to control the mechanism?
Who is going to check?
Over the years we have seen in Malaysia, most problems in government policy are not because of planning, but on the implementation parts. Even small problem like CD cetak rompak thingy also cannot be handled, and now we are making our public servant in the MOF and the Transport ministry busier?
Macam kes orang Siam beli minyak tadi, even that small lots also you cannot control, and now you create a mechanism to control let say 10 million car owners?
When the money retain by the government from giving out subsidy is given back to the people, where is the money for development? you take 50 you give back 50s, but hopefully some of the 50s you can put in an investment bank and get interest from it.
The subsidy in a way includes everyone, even new born baby, yang baru je lahir kat hospital tu, but giving out cash to car owner only benefited those with cars.
There are many other ways to handle this. Everyone knows and expected the price increase will happen sooner or later, but the solutions are just impossible. The money should be channel to other development project and not giving out cash to the rakyat, who we don't know exist from where.
Kalau dulu we have pengundi hantu, later we will have pemandu hantu.
Tak caya tunggu lah.
If I don’t have a car, where is my fair share of the oil money from PETRONAS? Why must I pay for something I did not own, where as everyone else benefited from it, although the benefit is very insignificant.
Where is just and what is fairness??
The moral of the story is, some people are just not that bright tau. They come out with stupid solutions just because they are in the cabinet. You don't need to have a PhD to be in the cabinet; even bloggers can be cabinet members, not to say the cabinet is not clever lah.
It takes one day for TNB to increase its tariff! We can imagine what would happen to everything else after this.
Somehow you try to be as patriotic as possible and love your country, but you just can't. You just don't know how.
Question 1: how much is the price per barrel sold by PETRONAS to the importer countries?
Question 2: how much do we buy the oil per barrel from other countries?
Question 3: how much profit PETRONAS makes from buying and selling this oil?
Question 4: How much money did the government get from the profit and levy and taxes to PETRONAS to import and export this oil?
These questions does not really matter because, nobody bothers to answer it anyway.
The second rationale is even more stupid, when they say the price has to be increase by taking away the subsidy so that people from our neighbourhood county won’t be able to buy subsidized oil. Just because 40 Siamese bought oil in Perlis, the whole 28 million people in Malaysia have to suffer?
The best part is the government has come out with a solution to cushion the impact of oil increase and they dare call it mechanism. Let us look at the mechanism and see if it really works. But before that let’s look at some of the benefit of ridding subsidies on oils.
First benefit is when all these subsidies are taken away; the retail cost of fuel will increase. In this case the price of petrol is now at RM2.70, instead of 1.97, a dramatic increase of 78 cents or almost 30 percents. Diesel increases by a ringgit for every litre, even more dramatic to manufacturing operators, who happen to produce product for the people.
So what happens when the price increase?
The direct action, people will look for substitute of oil for their cars or industry, which in this case is NONE? Some industry however will look for low grade material; most will not because changing of fuel will mean changing in their production process or changing technologies. So how do they cope with the increase of oil?
Yes, correct
they increase their price of product or service.
TNB increases their tariff not even 24 hours after the announcement were made. How efficient.
By the way, what is the cost of oil? A part of the retail price, the price of oil also includes what we call unaccounted cost, of the external cost. These for example if you include the tax subsidies, are the cost of taxpayers protecting the oil supplies (tax payers have to pay more so government can use their money to subsidize petrol), then we have the environmental and health cost and so on and so forth.
When the subsidies are taken away, it will create a positive domino effect. The tax will decrease and the world will be a better place when more and more people stop using petrol and live healthily. This will decrease what we call the hardest cost element to quantify, but potentially important, the environment and health cost associated with pollution and global warming (Wahl, J. B, 2006)
People will walk more, exercise more, and take public transport more often, people will car pool, less traffic jam, they will spend more time at home and we will have a better environment.
Example of ways to ease ourselves on price increase of oil can be read here.
Beautiful???
Beautiful isn’t it?
That’s the positive domino effect, let see the negative ones.
Logically speaking without taking into consideration all those hard to understand economics concept and terms, what would happen when we increase the price of important material (In this case taking away subsidy, and the material is oil)
Oil increase of transport / product manufacturing for example electricity and anyà increase ofà increase in price of consumer product àindustrial product - increase in interestà decrease of saving àconsumer consumption and spending à workers and union demand higher salary à increase of lending rate àrate no product in theà increase in consumer spending àincrease in consumer product to much money in the economy, butàmarket because government control the price àno product to purchase
Bla bla bla spiral increase blab la bla.
Yeahhhhhhhh, we have inflations!!!!!!!!!
Tepuk tangan.
Hopefully not lah kan,
so the government come out with a remedy, or what they call it a mechanism to control this.
How, by giving out cash to those who buy petroleum. Easiest rationale behind this is if the money is being pumped to the economy it will create higher consumption and greater K-effect or the multiplier effect. If the money is given directly to PETRONAS, the K effect is not that great.
K-Effect is not the effect Datuk K has towards Siti Nurhaliza oke!
Instead of paying single subsidy to PETRONAS and making PETRONAS staff very happy, they give back the money to the rakyat, but using money order some more.
Instead of having to pay to one pay master, now we government have to pay extra on the money order service, yeah more money to POS Malaysia and extra documentation for the JPJs, and each increase of service charge from JPJs.
Instead of making things easy buy just paying to one pay master, now many organizations have to be involved. The PETRONAS, because there are still 30 cent subsidy they said, more documentation work for the JPJs officer to ensure that the claim is genuine, the POS Malaysia and their postman working extra making sure hundred and hundred thousands of car owner get their money on time. You know what happen when people did not get their money on time. They get very upset, and they vote for the opposition.
So much work one ah??
Good more work for the people in POS Malaysia and JPJ (this is an example of a K-effect)
Beautiful???
Beautiful isn’t it??
Now let’s look at the direct effect to the people and see who will benefit using this so called new “out of the box” mechanism suggested by some government think tank brainiac.
For those who have car with a cc less than 2000, they will get around RM600 rebate.
For those who have bigger care, they will have less;
Motorcyclist will get around RM150 ringgit.
Sorry for those mat rempit who do not have road tax, you will not get anything, so you have to rempit using the unsubsidized oil price. The willy and wikang will worth more now, than your nyawa.
Will anyone benefit from this price increase, and will the mechanism works?
Is orang miskin who have 1 car below 2000 cc will benefit more than an orang kaya with 5 below 2000 cc cars, and 2 more than 2000 cc cars?
Will those orang miskin who have no cars will get /merasa the country’s wealth from oil if they don’t have cars, and instead they have to pay for the rise of public transport charges?
The school children who do not own any cars, but their parents have to fork our more money for school bus fare.
Will everyone find 20 years old scrap metal old car and renew the road tax just to get the rm600 rebate yearly, although they did not use the car at all, and never consume oil, but instead buat reban ayam??
Is the orang miskin will benefit from the price increase, although the reason for giving out subsidy in the first place is to ensure that consumer price can be controlled.
Why do you take the money from rich people tax payer to pay for oil subsidy, and then give back to them in other form which is very hard to control, and instead of controlling the consumer price, now they (the orang miskin) have to pay more to eat.
Do you have a control mechanism to control the mechanism?
Who is going to check?
Over the years we have seen in Malaysia, most problems in government policy are not because of planning, but on the implementation parts. Even small problem like CD cetak rompak thingy also cannot be handled, and now we are making our public servant in the MOF and the Transport ministry busier?
Macam kes orang Siam beli minyak tadi, even that small lots also you cannot control, and now you create a mechanism to control let say 10 million car owners?
When the money retain by the government from giving out subsidy is given back to the people, where is the money for development? you take 50 you give back 50s, but hopefully some of the 50s you can put in an investment bank and get interest from it.
The subsidy in a way includes everyone, even new born baby, yang baru je lahir kat hospital tu, but giving out cash to car owner only benefited those with cars.
There are many other ways to handle this. Everyone knows and expected the price increase will happen sooner or later, but the solutions are just impossible. The money should be channel to other development project and not giving out cash to the rakyat, who we don't know exist from where.
Kalau dulu we have pengundi hantu, later we will have pemandu hantu.
Tak caya tunggu lah.
If I don’t have a car, where is my fair share of the oil money from PETRONAS? Why must I pay for something I did not own, where as everyone else benefited from it, although the benefit is very insignificant.
Where is just and what is fairness??
The moral of the story is, some people are just not that bright tau. They come out with stupid solutions just because they are in the cabinet. You don't need to have a PhD to be in the cabinet; even bloggers can be cabinet members, not to say the cabinet is not clever lah.
It takes one day for TNB to increase its tariff! We can imagine what would happen to everything else after this.
Somehow you try to be as patriotic as possible and love your country, but you just can't. You just don't know how.
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