No more reason for Abdullah Badawi not to reduce fuel prices when international oil prices have dropped to a 19-Month low of US$51.56 per barrel on 12.1.2007 lower than the international oil price of US61 per barrel when fuel prices were last increased on 28/2/2006

Press Statement

by Lim Guan Eng

(Petaling Jaya, Saturday): Prime Minister Datuk Seri Abdullah Ahmad Badawi must act quickly to reduce fuel prices when international oil prices have dropped to a 19-month low of US$51.56 per barrel on 12.1.2007, which is lower that the international oil price of US 61 per barrel when fuel prices were last increased in Malaysia on 28.2.2006. The price of oil has been down nearly 6 percent on the week and 13.2 percent since closing 2006 at $61.05 a barrel.

If the government increased fuel prices last year because of rising international price of oil, then there is no reason not to reduce fuel prices when international price of oil has come down. Failure to so would reflect badly on the Prime Minister’s sincerity and commitment towards justice and fairness in his administration, particularly in reducing the financial burden of the poor. Rising inflation caused by rising petrol prices have caused hardships to wage earners, low-income groups and small-time businessmen where everything is going up except salaries

If the government can increase petroleum products by 30 cents on 28.2.2006, (the diesel price by 23% to RM 1.58 per liter and petrol price by 19% to RM 1.92 per liter in Peninsula Malaysia) when the price of oil was US$ 61 per barrel, such increases should be taken back when the price is now US$52 per barrel. The government has failed to show how increases in fuel prices have benefited the people through savings in oil subsidies. Instead all those billions of ringgit in oil subsidies savings were not channeled for development projects that benefited the people directly nor given as financial aid to flood victims.

DAP rejects the claim by the government that the price of petrol in Malaysia is still low as compared to other countries. The government forgets that Malaysia is an oil producer and exporter and Malaysians have a right to enjoy lower oil prices as oil resources belong not to one company but to all 26 million Malaysians. Even a rough comparison between other oil producing and oil importing countries show that the fuel prices in Malaysia is relatively high.

In the World Bank Development Indicators 2006 the GNP per capita of the following countries for 2005 were:- 1. Malaysia’s US$ 49,60 with the petrol price at US$ 0.53 cents (RM1.92) per liter; 2. Venezuela’s US$ 4,810 with the petrol price at US 4.5 cents per liter; and 3. USA’s US$ 43,740 even though the price of petrol was US 60 cents per liter.

Despite both Malaysia and Venezuela being oil producing and oil exporting companies, Venezuela;s’oil price of 4.5 cents per liter is almost 12 times cheaper than Malaysia. Both Malaysia and Venezuela have almost similar GNP per capita. In contrast the USA petrol price now is only 60 cents per liter, or only 13.2% higher than Malaysia’s fuel prices even though USA is an oil importing country. But what is 13% more in petrol prices when the GNP per capita of USA is US$43,740, or more than 9 times higher than Malaysia’s GNP per capita of US$ 4,960? Claims that Malaysia’s fuel price is lower compared to other oil producing countries therefore sound hollow and unconvincing.

For the government to ask Malaysians to accept the present fuel prices when every other neighbouring and foreign country is reducing fuel prices because of declining international oil prices is unacceptable and irresponsible. Further the public continues to have the impression that Petronas and oil companies would only profit more if they can sell at existing prices when the international price of oil has gone down.

The time has come for the government to distribute Petronas’ profits and allow the people to share in its profits. Petronas pre-tax profits of RM 70 billion last year is so huge that even if every single Malaysian got RM 2,000 each, Petronas would still have RM 18 billion for its capital expenditure and operating requirements. For Malaysians not to get a single cent from these oil resources is almost a moral outrage. Economic justice and equity demands that some sort of distributing mechanism must be worked out to ensure that Malaysian have a rightful share on their natural resources.

(13/1/2007)