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SURGING FUEL PRICES – A WORLDWIDE PREDICAMENT
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The price of oil has made a record jump to nearly US$139 a barrel
The British Broadcasting Corporation
(BBC) in a report stated that oil prices
were given a boost on a report by Morgan
Stanley analyst Ole Slorer, who suggested
the price of oil could rocket to $150 as
early as July.
Oil prices have risen by 25% in the
last four months and 400% since 2001.
In 1999, the price of oil hovered around
US$16 a barrel. By 2008, it had crossed
the US$100 a barrel mark.
The latest forecast from the
International Energy Agency calls for
global oil demand of 87.2 million barrels a
day this year.
In June, energy officials from five top
consumer nations met in Japan to discuss
soaring oil prices.
Japan, the United States, China, India and South
Korea combined consume nearly half the world’s
oil. China is the world’s second-largest oil consumer
after the United States.
In 2007, China imported 3.2 million barrels per
day, and its estimated usage was around 7 million
barrels per day. The US, by contrast, consumes
around 20.7 million barrels per day.
Meanwhile, according to London consultancy
Global Insight, there are approximately 887 million
vehicles worldwide, up from 553 million just 15
years ago.
In the United States, the Transportation
Department in May reported that in March,
Americans drove 11 billion fewer miles than in
March 2007, a decline of 4.3 percent. It is the first
time since 1979 that traffic has dropped from
one March to the next, and the month-on-month
percentage decline is the largest since record
keeping began in 1942.
With the nationwide average price for regular
gasoline closing rapidly on US$4 a gallon,
Americans are bracing for expensive driving and the
combination of record prices, a slowing economy and
a tight credit market has beaten consumers down.
General Motors Corporation in June meanwhile,
also outlined a seismic restructuring to reinvent
itself as a smaller company less reliant on big
trucks. By 2010, the No. 1 U.S. automaker will have
shut down four truck plants, cut thousands more
jobs and re-created its lineup to include more fuelefficient
cars and crossovers and less of the hulking
SUVs and pickups that have long driven profits in
Detroit.
When the restructuring is done, midsize SUVs
such as the Chevrolet TrailBlazer, and the entire
lineup of Hummer trucks may disappear from GM’s
portfolio.
GM is working diligently to produce a lithiumion
battery that can adequately power a Chevy Volt
electric car it expects to be sold in showrooms by the
end of 2010.
In Vietnam, sales of electric bicycles are surging
like the price of petrol as they are far cheaper to run
and their riders don’t need a license or helmet. Many
of them are quite fast too, and there’s a real fear that
they might cause traffic accidents.
Electric bikes have been on the local market for a
few years but failed to take off until 12 months ago.
An electric bike made in Vietnam retails for
VND3.7-4.6 million (US$231-287) while a new
import from Taiwan-China or a used model from
Japan goes for VND5-8 million (US$312-500).
Vietnam and China make motorbikes that sell for
close to these prices.
While a motorbike uses one litre of petrol costing
VND14,000 (RM2.825) to travel 60 kilometers, the
cost of recharging an electric bike after the same trip
is just VND1,500 (30 sen).
In order to attract buyers, they have to turn out
cool-looking models that don’t look sissy and can do
well over 50kph.
In countries like South Korea meanwhile,
skyrocketing fuel prices have increased thepopularity of small cars. In a report
published by the Korean Herald in June,
local carmakers revealed that 20% of the
country’s first quarter sales figures of
196,000 passenger cars sold were city cars.
Last year, the proportion was only 5.5%.
Reuters meanwhile, reported that
drivers of luxury cars in
Iran will no longer be
able to buy heavily
subsidised
gasoline from
June 21.
The
new rules
applies to
Iranianproduced
cars with
2,000cc
engines
or more
and
imported
cars of 1,300
cc.
It is the latest
change of a rationing
system launched a year ago
under which motorists can buy 120 litres
per month at the price of 1,000 rials per
litre (35 sen), some of the cheapest fuel in
the world.
Iran is the world’s fourth-largest
oil producer but lacks enough refining
capacity for domestic needs, forcing it
to import large amounts of gasoline and
burdening its finances.
In a bid to curb consumption, it
introduced rationing in June 2007. Until
then, motorists could buy unlimited
amounts of heavily-subsidised gasoline.
From March this year, it allowed the
sale of extra, higher-priced gasoline at
4,000 rials per litre (RM1.401) outside the
rationing system but all motorists still had
access to the monthly quota of 120 litres at
a quarter of that price.
Under the change announced by
caretaker Interior Minister Mehdi
Hashemi, owners of luxury
brands can only buy the
higher-priced petrol.
In addition, the price
of higher-quality
super gasoline will
rise to 5,400 rials
(RM1.892) from
5,000 (RM1.752)
per litre
previously.
In Taiwan,
the Associated
Press reports
that President Ma
Ying-jeou uses stairs
instead of elevators and
addresses conferences
in short-sleeve shirts.
Chauffeur-driven Cabinet
ministers leave their Mercedes and
Cadillacs in garages and ride compact
sedans to work.
Rank-and-file officials, meanwhile,
pedal bicycles in Taipei’s clogged traffic.
These efforts are part of the justinaugurated
Ma’s sweeping new energysaving
drive to deal with soaring fuel,
food and other prices and keep looming
inflationary pressures under check.
It has also called on the public to use
car pools, cut down on air conditioning
use and plant shrubs on building tops to
stimulate natural cooling.
THE GREAT FUEL SUBSIDY DEBATE
FUEL PRICE
WHAT OTHERS ARE PAYING
AROUND THE REGION/WORLD |
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