Coming home after a prolonged stay of many months in the States and Australia, where my children are working, I was shocked by how much Ringgit’s buying power has shrunk.. Prices of almost everything, including food, have skyrocketed. Even street food like prawn mee or fried Kwai teow have gone up so much, it’s scary. Items in groceries and supermarkets are selling much more expensive than before, on top of the 6% GST.
Petrol pump price however remains at RM 1.95 per liter. This despite global oil prices falling to US30 per barrel yesterday. I remember that in July last year, when I was driving across US with my wife, oil price was around US60, and US pump prices was around US3.00 per gallon. At that time, our pump prices was about the present level too.
Now US pump prices have come down to US 1.97, giving American consumers a big savings on energy cost and putting more money in their pockets to use. Although US oil companies are suffering, the ordinary people have more disposable income due to cheaper petrol and energy bills.
Malaysians, on the other hand, have to content with rising food and consumption prices, while cheap oil in the world doesn’t seem to translate to any real savings in their energy usage. If we follow US trend, our pump prices should be much lower than it is now, thus at least save us some money on petrol and energy usage to counter the skyrocketing cost of living, and give us some reprieve to fight inflation. Maybe our authority should take another look on this, and pass the benefits of cheaper oil to ordinary people by lowering pump prices. That will in a way be deflationary, and helps to counter the high inflation that we are experiencing now.
Oil prices are going to be low for a long time. While demand for oil has slowed, supply has been increasing, largely due to the shale oil production in US. US is now producing enough oil for its own consumption,, and does not need to import from its traditional suppliers in Middle East. Middle East countries have to look to Asian markets to sell its oil, but unfortunately, China is slowing down and need less oil energy than before, and thus there is a glut in global oil supply.
More and more electric cars and hybrid cars are being produced, and even for petrol-powered cars, new technological advances are making them more energy efficient. Wind and solar energy are being tapped increasingly, even in US, the country that consumes the most oil. As we were driving along the Columbia Scenic Drive, we saw so many wind turbines on the hills we passed. Then in cities like Portland, electric stations can be seen in the cities for electric cars to recharge.
As a oil producing country, we have not foreseen nor anticipated this scenario. We didn’t plan for the rainy days during the sunny period. Oil has given us prosperity for many years, but it has also given us a false sense of security. In hindsight, we should have used oil money more efficiently to diversify and lessen our dependence on oil income. Instead, oil money has made us complacent, and the many handouts from the government has made us much less competitive. GST may have helped the government with alternate source of revenue, but the drop in oil prices has resulted in massive depreciation of our currency, and as a result, cost of living has skyrocketed, and even working 2 jobs, as advised by a ‘wise’ leader, may not be enough to make ends meet.
Is 2016 going to be better? I don’t think so. It may get worse before we can get better. But we must start learning to be competitive by slowly replacing the ‘crutches’ that we have given out all these years. We must influence our people’s mindset to be more proactive, more enterprising, more hardworking and prepare ourselves for the next phase in the world’s industrial revolution. With the advent of 3 d printing, we are entering a new era of digital manufacturing as opposed to the old ‘mechanical’ manufacturing.
If we are not well prepared, we may never get back to the stage where we were before!