Fuel hike - inflationary signal ?

5.6.2008.

So, the much anticipated and feared increase in the price of petrol and diesel has happened. And to put salt to  wound, TNB also made an announcement on an increase in its tariff. Perfect timing. Are worse in store ? Is inflation around the corner ?

Everyone knows that sooner or later the price of petrol and diesel would go up. What's the oil price now? USD145 ? Everyone was also hoping that it won't come so soon, and it won't be so much. Fat hopes !

I went back to Kuala Pilah yesterday, and returned to Seremban at around 6 p.m. By that time I had already received an sms from my former staff from, of all places, Kuantan, saying petrol price would go up by 41% come midnight. I still had half a tank in my car, so I thought once I reach Seremban I'd fill up. Fat hopes again. Every petrol station I passed had vehicles queing right up to  the roadside, and many were double-parked. But one station near Paroi Jaya was deserted - I learned later that the owner claimed to be out of stock ! (clever fellow, that's a quick small fortune from his hidden stock).

I said "What ? How much can you take ? 40 litres at 75 sen, so that's about RM 30, and you're queing for two hours for that ? It's not the amount, I think. It's the idea that you're saving money . This is what I don't understand, this saving money concept. I mean, we are an oil exporting country, and our producer company is making record profits. Can't the government tweak the accounts and lessen the price hike and still leave a reasonable profits for the producer ? What's this obsession with the huge and obscene profits ? 

It's the same with TNB, Telekom and the big National banks. It's like a race for them, see who can come up with the biggest profits. What happened to national interest and charity ? The people, our citizens, are customers, too. You don't kill your customers. In the case of the banks, it's always better to reschedule and get your all your money than to liquidate and lose some money. The worst hit will be the transporters - the lorry operators, the shippers and the airlines. And 30% of the costs of everything is transport. See where this is taking us ? Higher transport cost, higher cost of goods and services, more pay demanded by workers, eventually more money doled out by employers, the same amount of goods changing hands, so more money for less goods and Pow! super inflation hits you right in the face. 

I don't know if Dollah received the right advice. I don't know if Dollah Badawi even realises the implications of such a drastic increase in the price of petrol and diesel. Through history governments all over the world have been toppled because of the increase in fuel price. Is his ill-fated government going to be added to that pile ? Not that it doesn't already deserve it.

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