tag:blogger.com,1999:blog-18183714.post3747215154161806306..comments2024-03-08T20:25:35.963+08:00Comments on Malaysia-Finance Blogspot: Oil Subsidy, The LATAM ExperienceSalvadorDalihttp://www.blogger.com/profile/06868577716920232901noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-18183714.post-920768027967879292008-06-20T09:32:00.000+08:002008-06-20T09:32:00.000+08:00Care to comment on this1 barrel = 159 liters x RM2...Care to comment on this<BR/><BR/>1 barrel = 159 liters x RM2.70/liter = RM 429 or USD 134 <BR/><BR/>On 1 hand, we are paying the full cost of 1 barrel of crude oil with RM2.70 per liter but on the other hand the crude oil only produces 46% of fuel. <BR/><BR/>Msia sells crude oil per barrel at USD130 buys back Fuel per barrel at USD134. And not forgetting, every barrel of fuel is produced with 2 barrels of crude oil.<BR/><BR/>1 barrel crude oil = produce 46% fuel (or half of crude oil), therefore<BR/>2 barrel crude oil = approximately 1 barrel fuel<BR/>In other words, each time we sell 2 barrels of crude oil, equivalently we will buy back 1 barrel of fuel.<BR/><BR/>Financially,<BR/>Malaysia sell 2 barrel crude oil @ USD 130/barrel = USD 260 = RM 858<BR/>then, Malaysia will buy back fuel @ USD 134/barrel = RM 442/barrel<BR/>Thus, Malaysia earn net extra USD 126 = RM 416 for each 2 barrel of crude sold/exported vs imported 1 barrel of fuel !!!<BR/>(USD 260-134 = USD 126 = RM416)<BR/><BR/>So where this extra USD 126/barrel income is channeled to by Malaysian Govt?????????<BR/><BR/>Another analysis:<BR/><BR/>1 barrel crude oil = 159 liters. <BR/>46-47% of a barrel of crude oil = fuel that we use in our vehicles. <BR/>46% of 159 = 73.14 liters.<BR/>@ RM 2.70/liter x 73.14 liter = RM197.48 of fuel per barrel of crude oil. This is only 46% of the barrel, mind you. Using RM 3.30 = USD 1, we get that a barrel of crude oil produces USD 59.84 worth of petrol fuel (46% of 1barrel). <BR/>USD 59.84 of USD 130/barrel turns out to be 46% of a barrel as well.<BR/><BR/>Another 54% = bitumen, kerosene, and natural gases and so many more. <BR/>And this makes a balance of USD 70.16 that has not been accounted for.<BR/><BR/>So this is where I got curious. Where is the subsidy if we are paying 46% of the price of a barrel of crude oil when the production of petrol/barrel of crude oil is still only 46%?<BR/><BR/>In actual fact, we still pay for this as they are charged in the forms of fuel surcharge by airlines and road taxes for the building of road (because they use the tar/bitumen) and many more excuse charging us but let us just leave all that out of our calculations.BBabyBhttps://www.blogger.com/profile/08486689239450845641noreply@blogger.comtag:blogger.com,1999:blog-18183714.post-13803360087334950792008-06-19T10:21:00.000+08:002008-06-19T10:21:00.000+08:00It's pretty ironic now to see that petroleum expor...It's pretty ironic now to see that petroleum exporting country with high subsidy have higher inflation. I guess subsidy breeds inefficiency and wastage. The people need to be educated that natural resource is scarce and once used, it's not going to be available. We should have learned our lesson based on the excessive tin mining during the 19th century...<BR/><BR/>In addition, I've read a book (Alan Greenspan - The Age of Turbulence) that describes the symptom for the curse of oil as Dutch disease (http://en.wikipedia.org/wiki/Dutch_disease) when Dutch was able to find some gas during the 60's. I saw Norway is doing a very good job in managing the wealth (In form of Norway Oil pension fund) that come with sudden windfall. <BR/><BR/>Let's hope that our government can come up with a good plan in tackling this issue...Victor AYhttps://www.blogger.com/profile/07091677858150066695noreply@blogger.comtag:blogger.com,1999:blog-18183714.post-18405162702117477962008-06-19T08:07:00.000+08:002008-06-19T08:07:00.000+08:00But sadly GDP and inflation rates are not the only...But sadly GDP and inflation rates are not the only measures of progress, Venezuela and Mexico have the highest crime rates in the world! We really do not want to follow the "LATAM" paths.Sisuahlaihttps://www.blogger.com/profile/04296787376464021393noreply@blogger.com