At What Price?

Last week Indonesia hiked the cost of fuel by around 30 per cent in response to soaring global oil prices and a ballooning subsidy bill. It resulted in strong protest.

When one look at the graph for comparison (not all the countries are included there), it’s interesting to see the vast differences in the fuel price. The graph shows the latest gasoline (RON95) price per country. The cost of raw oil is put as a comparison. Because of a lag of 2 to 4 months between increase in oil price and the effect on the pump station, the current price should be compared with an oil price of US$80-100 per barrels. On top of that one have to add refining, transport, marketing, tax etc. So anything below the lines is heavily subsidized. Most of those countries that have low prices are the producing countries including Brunei. It imposes a heavy burden on the government. It also inadvertently led to wastage and in some cases ingenious cross border profiteering.