Lulu was going to do a lulu entry on this, but Lulu thinks Don Rahim of Promuda has done an excellent job on this.
So that you do not compare Don Rahim's wisdom with that of Lulu's, Don's piece is in blue.
The DPM said that the opposition's promises to reduce oil prices will only bankrupt the country. See article below.
How true is that statement? Let's find out.
The following is the amount of total subsidies paid by the Government every year. Data taken from http://www.bnm.gov.my/files/publication/msb/2007/11/pdf/6.3.pdf
Notice that the total subsidies have increased 2.75 times since 2002.
But bear in mind that the data above did not specify that it's only for petroleum subsidies. This means that other subsidies are also included in those figures.
Next, let's find out how much is the Govt's revenue from petroluem taxes & duties, dividend from Petronas and gas & petroleum royalties. Data below taken from http://www.treasury.gov.my/view.php?ch=24&pg=183&ac=1443&fname=attachment&dbIndex=0
Notice that total revenues have increased 2.94 times since 2002.
Next, let's compare the above tables and find out the net figures for each year to see if the Govt is better off or worse off from the increase in global oil prices.
WoW! The net figure has increased almost 3 times since 2002!
Means that the Govt benefitted from the increase in global oil prices. It was a RM35bil windfall in 2006! And even after deducting the RM10.1bil subsidies for that year!
Means that there is actually some leeway to reduce oil prices without bankrupting the country by using that 'windfall', if we were to look at the situation from this perspective.
Any idea where that 'windfall' every year is being utilised for? Is it being saved for the future, used to pay our debts or utilised for development purposes? In other chapters, we'll explore that.
still think the fuel subsidy is unsustainable?
still think our country will go bankrupt?
or, in a more lulu manner of thinking, do you think the government celebrates or frets when the price of oil goes up?