Salient. Official Newspaper of the Victoria University of Wellington Students' Association. Vol 40. No. 7. April 13 1977

Oil Price Affects Consumers

Oil Price Affects Consumers.

On 24 February, four oil companies — Shell, BP, Esso, and Mobil — announced an increase of 8-10% on prices of cooking gas. They, however, declined to disclose the reasons for the increase.

Earlier, Tengku Razaleigh Hamzah, Minister for Trade and Industry, said that the oil companies had requested a price hike because the price of crude oil had been increased by the OPEC (Organisation of Petroleum Exporting Countries.) They had also requested for the price increase of petrol, diesel and kerosene.

As the cooking gas is a daily necessity and is widely used for cooking among the Malaysian and Singaporean families, the price hike hit the ordinary households badly. Protesting against the increase, the Melacca Consumers' Association said that in spite of price increase in crude oil, the oil companies should and were able to absorb the higher operation costs instead of passing it on to the consumer. They urged the government to include cooking gas in the list of controlled items as it is a daily necessity.

At the same time, angry reaction was reported from Sibu when an increase of 6c per gallon for diesel was announced. This will adversely affect the small local industries, fishing and the express launches. It has also caused anxiety among the timber traders as timber is transported by boats run on diesel. Increase in diesel will jack up capital cost while the demand for timber export has not picked up for some time.

While oil increases cause such economic havoc in Malaysia and Singapore, many questions are asked about oil production in Malaysia. As an oil producing country that has recently acquired the status of net exporter of oil, it is an irony that the people have to bear the burden of increase in price of foreign oil.

Figures show that foreign companies while exporting 75% of Malaysian high quality low sulphur content oil, import foreign oil (75% of it is from OPEC) for local consumption. Such import-export swap only serves to increase the profit margin of foreign companies.

While already profiting from such "oil swap", the companies could make further profit by passing any cost increase on to the consumer.

Such is now the case in Malaysia. It is therefore little wonder that Shell is able to announce a net profit of 1,300 million pounds for 1976 — an increase of some 36.8% over their previous year's figure.

As a result of such practices, we have irrational phenomena such as Malaysians paying more for petrol and by-products than Filippinos, who do not even produce oil! Even more ridiculous is that the people in Sarawak, the "oil state", pay more for the cooking gas than those in the Peninsula. For instance, the newly increased price for gas is 8-9% higher in E. Malaysia than in W. Malaysia.

Ref: Nanyang 11, 13, 23, 25 February 1977

Sarawak Tribune 27 February 1977

See Hua 28 February 1977.