Wednesday, November 11, 2009

One Year Down the road

On Nov 01, 2008 the retail petrol pump price was adjusted downwards by 15 sens.

It just seemed unreal. Barely 3 months before, in mid 2008 it was panic stations. The crude oil price shot up to USD145 per barrel and CPO went up to a record RM4486 per tonne

The retail pump price was then revised upwards a steep jump from RM 1.92 to RM 2.70. The Federal government had to do it. The petrol subsidy had burst its seams. It was survival amidst protests all round.

The plantation big boys on the other hand were raking in big money. Even the lowly butter substitute, margarine which is palm oil based was beyond the reach of many. To make it equitable the windfall tax was mooted by the government. The plantations must be made to share their good fortune and pay the additional tax.

It was not difficult to see as a consequence the sudden rise in the price of goods. BERSIH and HINDRAF came into the picture with their brand of admonitions through street demonstrations.

Then, 3 months after, again it was panic stations. The reasons emanated from the same source ie the crude oil and the CPO market again. This time however it was a different situation, the opposite, in fact.

Who would have thought crude oil would plummet down 60% from USD145 to USD70 per barrel while CPO to RM1600 per tonne from a high of RM4400 plus. It was madness. The government was relieved!

The hypermarkets had also responded likewise with price reductions on an array of goods. And the roti canai sellers then were not to be outdone. They made a big show of reducing their price of roti canai and teh tarik by a measly 20 sens (was it 10 sens?) There were posters announcing it and the then Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad was at the various joints which were promoting it and doing the teh tarik stunts together with them. But it remained just as what it was, just a big show!

Sometime in mid-1973 when the OPEC countries cut production of oil on account of Israeli aggression in the Middle East the price of crude (I don’t remember what it was) suddenly shot up.

This was the first oil crisis. OPEC through the Saudi Oil Minister Sheikh Ahmad Zaki Yamani was showing himself to be all too powerful. OPEC had the whole free world in its grip. It was a sudden wake up call for the U.S. and the western world. The Arabs ought to be restrained, so they agreed silently. The Arabs ought to be put in their right place!

Now we know why the U.S. invaded Iraq and Saudi Arabia was tamed and silenced. The western world must have been working on it since 1973, (or even earlier?)

The EC countries ' pooh-pooh' it saying, that " OPEC could cut production, so what? " what can the Arabs do with their oil, drink it? We are blessed with loads of Octoberfest beer to give them when they get sick of the oily stuff, " they mockingly retorted.
To give a semblance of solidarity, among them however, the EC countries went on a ‘carless Sunday’ policy where cars were not encouraged to be on the road on Sundays. I experienced this first hand as I was then attending a course in Delft, Holland.

(where I met OP Mazni Ibrahim also on the same course - remember Nida, the Filipino girl? ..... but that’s another story)

What was a busy thoroughfare in front of our apartment then was just devoid of cars except for the usual trams that rumbled by. Unfortunately it affected us, just so, as we normally took advantage of the weekends gallivanting around the neighbouring cities. We used to go by hired cars south for day trips as far as Odense and Brugge in Belgium and cities bordering the German side. So ‘carless Sundays’ meant no travels.

On the home front our Indonesian maid who has been with us for close to 10 years (and who had managed to acquire a few acres of fruiting palm oil land since) lamented woefully of bad times.

“ Before I could get the equivalent in rupiah of RM10 per kilo. Now it is just about RM2 per kilo”

I could remember how proudly she flashed the S&P Agreement to seal the land ownership barely two years ago. We had a hand in extending a wee bit of an advance for its payment to top up to what she had saved. Unlike some of the other maids who splashed their earnings on new clothes and prepaid DIGI cards, she was frugal in her ways.

Now, fast forward one year down the road, Nov 2009,

The RON 95 (research octane number) is now at RM1.80 - five sens higher than the previous RM1.75. While the RON 97 has gone up to RM2.05 from RM1.80.

It is however convenient for consumers as the types and the prices are the same at all stations. It would have also saved the oil companies on their advertising costs. No more the ridiculous ‘put a tiger in your tank’ types of promotions just to differentiate between them.

When these prices were adjusted upwards there was not even a whimper unlike last year. It just goes to show that last year when the rakyat were unhappy with the PM then, they went to town. They just piled up the criticisms, voiced their unhappiness and worsened the situation.They would pick on any issue, and it would flare up.

Now, BERSIH is not as vocal and HINDRAF turned themselves into the Makhal Sakhti Party, a legally positioned political party and are friends with PM Najib. If they play their cards well they may just shove off Samy and MIC out of the way to be left as artefacts of history.

Crude oil is hovering at the mid USD70s and even touching USD80. CPO is at RM2200 per tonne. From July to September 2008, the MPOA (Malaysian Palm Oil Association) estimated about RM260mil of windfall profit tax was collected when the CPO price stood at around RM4,400 plus per tonne.

Padang on the western coast of Sumatra was devastated by a powerful 7.9 Richter scale earthquake that flattened the city. My maid’s palm oil land in Bangkinang which was further inland was not affected. So also Pekan Baru which was spared, but the 30-year old concrete bridge spanning the 50 metres of waterway at Bangkinang collapsed. The various vehicles light and heavy would have to make a detour of more than 20km without the bridge.

Now the local palm oil price at Bankinang is the equivalent of RM1.50 per kilo. Our maid just left it to her siblings to harvest and pay off expenses for which otherwise she would have to send hard cash from here.