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| Background
The recent drastic hike, and the likely entire pullout of fuel subsidies come August strikes me as panic mode, mainly because it is political suicide for UMNO. It tells me one thing: The Fed Government is desperate and must already have their backs to the wall to make such drastic changes.
As of today, I am made to understand that Malaysia is a net oil exporter. So theoretically, Petronas (and hence, Fed Govt) should be generating a Net Cash Inflow from the prices of oil.
So in a worst case scenario where as of today, our country’s bank balance is at zero (we’ll call it the Fuel Subsidy Account), everyday that we are exporting more fuel than we are consuming, the balance in the Fuel Subsidy Account should increase, allowing us to build some sort of cushion in the slow dismantling of fuel subsidies.
Hence, something hidden is/has happened beyond recourse that is causing such panic seen in the Abdullah administration.
Theory
What if Petronas has been speculating in oil futures contracts that is now proving detrimental to them. If my theory is true that they have locked in contracts months ago to supply oil at a certain price that is now below the market price, then it may explain why our Fed Govt is in panic mode.
Imagine for example, that in one contract 6 months ago, Petronas speculated that the price of oil would not climb past $100 per barrel and locked in a contract for a Buyer to purchase them at $120 per barrel, thinking they would make a killing of $20 per barrel.
6 months later, the price is now $138 per barrel. Petronas is now supplying at $18 below market price to this Buyer.
Now, lets say the price of extracting oil is only $50 per barrel. So even if the oil was sold below market prices, Petronas’ profit is still none too shabby at $70 per barrel for supplying oil at $120 per barrel.
But since Petronas profits are used by our Fed Govt to offset the cost of imported oil, this is where the problem begins. The Fed Govt is paying for oil at current market prices.
If that were really the case, even the profits made from being a net oil exporter in volume may not be able to offset the cost of importing oil. So forget about even building up a surplus in the Fuel Subsidy Account. It’d be a steal if we didn’t have to dig into our foreign reserves just to subsidize the price of fuel.
And I think this may explain why the panic mode in the present administration. Instead of the administration having the luxury of taking staggered steps to expose Malaysians to real world prices, they are forced to put their own political career on the line, drop the fuel subsidies like a hot potato, and pray it doesn’t get any worse than that.
While everything is so uncertain for now, one thing is for sure. I do not wish for the theory to be proven true.
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|  BN 137 - OPP 82 
!~*Congratulations Barisan Nasional*~!
On your majority win in the 2008 Malaysian Elections.
It was a vote of confidence in you by the people of Malaysia that we cannot deny. We were well and truly beaten.
Congratulations.
Sincerely,
The Opposition
Now that you got what you wanted Malaysia, get ready for growing pains.
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| Dear Friends & Fellow Malaysian Citizens,
As you know, the 2008 elections are just around the corner. If you are concerned for the well being of the country, this is the chance for you to do something concrete about it.
Please do register to vote at the nearest post-office if you have not already done so.
If you are told that they are out of Electoral Registration Forms, get a Malay friend to collect the forms for you, or ask for any other post office that might still have the forms.
You can check the status of your voting eligibility at the following web address:
http://daftarj.spr.gov.my/daftarbi.asp
For those that know that there is something wrong with our current government, but might be feeling a tad lazy/troubled to go through the motions of registering to vote, here’s a thought:
“The next chance for change in this country will be in another 5 years time.”
The time is now. Don’t let this opportunity pass you by.
Vote smart. | | |
| Passion. You can muster.
Knowledge. One can gain.
Experience. Comes with time.
Skill sets. Can be honed.
Intelligence. The world isn't always fair ain't it?
Strategic foresight.
It is the sum total of one's accumulated knowledge & experience applied to the formula of critical thinking.
Today, I saw at work the thought process of a person who's approach gives a very refreshing contrast to the brash, grab-any-opportunity, give-anything-a-go entrepreneur's approach that I admire very much.
I was silently awed. In old time China, they call it 小巫见大巫. A petty conjurer meets a great magician.
For all the trying, you just cannot learn intelligence.
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| Thinking of messing around with me? Then you better think twice. Because
I know people, who know people,
who know people
who know people.
Can you shit with that?
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