Get things right before changing it!

1. On the 24th November 2008, the government had announce that they might fix a minimum price a.k.a a floor price for fuel at a price of RM 3 per liter. Yes, Its RM 3 per liter and its quite high of coz for consumers especially the middle income and also the low income group to live with it. Here is the news that came out in THE STAR.

2. What is minimum price you ask me? well, its a price where the government set above the equilibrium of the demand and supply graph of the free market. So if the government impose this minimum price on fuel now or then, that means that the minimum price the fuel will be at RM 3 or more. Nothing can be less than RM 3.

3. So, should the government really impose a minimum price or just let the fuel price to continue float in the free market? Lets us look at minimum price first. When the government imposes a minimum price, we the consumer will have to pay RM 3 per liter of fuel to keep us going. That means that the cost of production will also tend to increase by firms and also producer so that they can sustain the cost and also make profit to keep them alive.

4. We have experience this worst case scenario when the government had to set the fuel price at RM 2.70 few months back and had experience a great impact in our daily life when all the price of good and services had increase tremendously. Goods like necessities goods which is our daily product is the one which affected by the fuel price because these goods are highly in demand. Eventhou there is a close substitute goods to it, the price of goods will still increase.

5. With the world going thru a deep recession and inflation is just too high, can the consumer bear the high cost as they income are not increasing with time? Yes, the government can say that it is time to conserve and use public transport instead. But is our public transport are capable to withstand the huge amount of user everyday for 24 hours 7days a week? Is our public transport up-to-date with other public transport around the world like for example the underground in London or the MRT in Singapore which bring almost perfect effiency to the public?

6. Yes, I agree that it encourage people to start using public transport so that we can conserve our resources on fuel but if the government would really wanna to fix a min price, they should spend the money on upgrading our public transport until it is efficienct just like in London or Singapore so that the public will feel safer, confortable and will reach in time for work. With the amount of money they are going to set aside for this plan to set this min price, I would suggest to the finance minister and also the domestic and consumer minister and also not to forget the national economic council to review again this plan and the money is better use in public transport. When the time is ready,then set it!

7. For a mean time, its whats best to let the fuel price to continue float in the free market as the oil per barrel now coz less than USD $ 70 that causes our fuel to decrease to RM 1.90. I am sure the fuel price will sustain at that price for now or so because if they tend to drop more, the oil producer will loose out alot esp in the emirates countries. Its whats best to let it float meanwhile searching for a better alternative recources.

8. Conclusion, I suggest that the government put on hold first as the nation is stil not ready to accept these impact as we are now in an economy recession and get the public transport fix 1st esp KTM.