Friday, June 13, 2008

Oil price hike protest is unjustified and wrong

To protest against the recent fuel price hike, a large group led by PAS Youth chief Salahuddin Ayub, gathered in front of the Kampung Baru mosque after Friday prayers. They walked from the mosque at about 2pm towards the junction of Jalan Tuanku Abdul Rahman and Jalan Dang Wangi in front of the Sogo shopping complex while chanting slogans and carrying banners.

With global oil prices soaring, government was forced to slash fuel subsidies that were draining government coffers although there will be an immediate adverse effect on Abdullah's popularity. If Malaysia doesn’t increase the fuel price now, the economy will go down.

Ironically, global oil prices are being driven by external factors such as the weakening dollar and speculators -- and are thus out of the cartel's control. Oil is an inherently volatile commodity, and thus highly attractive to speculators, who profit by betting on the daily and even hourly fluctuations in price. And while there's nothing criminal about betting on price, it is a problem when the bets themselves influence the price.

Malaysia is struggling with a spiraling fuel subsidy bill that may breach
more than 45 billion ringgit (US$14 billion) this year as global oil prices skyrocket. It is unjustified economically and politically in riding and exploiting on wasting public funds to keep the fuel price artificially low.

As a responsible government, there is a better use of the public funds in education, health, housing, and employment and to be channeled to increasing food security, including subsidizing imported rice, flour, bread and cooking oil. Thus, the burden of soaring international fuel prices by and large will have to be passed on to the consumers regardless of oil producing country status.

The fuel price hike is expected to send prices of food, transportation and other essentials higher across the board, piling further inflationary pressure on Malaysia. Malaysia's inflation is currently at 3%.

It is reported that the US's "imperial ambitions", "economic egotism" and “aggressive financial policies" are the root cause for the oil hike and current problems in the global economy.

The protect action targeted at the Malaysian government is thus seen as unjustified and wrong as the hike is purely due to external global oil prices soaring factor. The massage should be read clearly and should not be under any doubt at all.

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