Tuesday, March 11, 2008


The crude oil hits record again, the trend looks as if the world oil prices will continue to rise.

The question remains: Should the Malaysian public again expect the Government to continue subsidizing fuel, particularly at current levels running into RM14bil to RM16bil a year? When and how much the consumers, like the consumers all over the world, pay for higher oil prices?

Fuelled by a continuing weak dollar, crude oil futures surged $107.72 a barrel, a new inflation-adjusted record and their fifth new high in the last six sessions.

It is the fifth time in six sessions that oil prices have hit new highs, as investors shift funds into oil as a hedge against a weakening dollar. Cartel Opec's decision last week not to raise supply has added to pressures.

Many analysts believed that the continuation rise in crude prices is not supported by fundamentals, with supplies generally rising while demand is falling.

The dollar, which has driven the rally from $87 in January, fell against most major currencies yesterday, hitting three-year lows against the Japanese yen, as the head of the European Central Bank expressed concern about the "disorderly movements" of exchange rates.

Ironically, the Malaysian national oil company Petronas gains more from rising oil prices because the country is a net oil and gas exporter. However, in return, public should demand that public funds be spent prudently and efficiently.

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