About To Raise Fuel Prices

NULLMid-2013 and then, people have made difficult the rising price of fuel oil (BBM) because it results in a rise in prices of basic goods consumed by the public. Role of Fuel (BBM) is very important in people’s lives. It is the duty of the government in pricing and thus guarante its availability in the domestic market. Government policy is done by giving subsidies to reduce the price of fuel prices make it affordable by society and at the same time maintaining price stability. However, pending the impact is felt by society as a result of rising fuel prices, the people again confronted with the oil price hikes this year.

Jokowi-JK government within the end of 2014 will soon raise fuel prices for fuel subsidy by reason of overburden State budget and fuel subsidies is in appropriate. Reduction in fuel subsidy will be transferred into other sectors that require acceleration of development, ranging from infrastructure to health care and public education. Originating with the government raised fuel prices can stimulate economic growth in Indonesia. In addition, the amount of saving the State over rising fuel prices can be immediately transferred to productive outposts like; agriculture, construction, health, and education.

But, things are different, delivered by expert economists like Ichsanuddin Noorsy, he believes if the price of fuel subsidy was increased to Rp 1,000 / liter, then inflation will rise 1.43%. In addition, the percentage of the poverty rate will also rise 0.41%. This means that no additional the poor from 1.5 to 1.6 million people if rising Rp. 1,000 / liter. So, if the government raised fuel prices Rp. 3.000 / liter, the addition of a 1 percentage poor, 23% or about 4.5 to 4.8 million poor people. Central Statistics Agency (BPS) states, in March 2014, the number of poor people in Indonesia reached 28.28 million people, about 11.25% and if the increase in fuel prices have increased aka 33.08 million poor people.

Then the government also argued that fuel subsidies is inappropriate. According to the government, an estimated 80% of fuel subsidy actually enjoyed by the middle class and the rich. However, we doubt the accuracy of the data. Even if true, the government should not make policy buyers expense of fuel from the middle down. The government should improve fuel distribution mechanism for the right target. Or otherwise, the government should raise the price of a four-wheeled vehicle taxes [private]. The additional tax revenue could be used to cover the lump sum budget deficit.

But fuel subsidies can not be seen only in terms of as a transportation fuel. Moreover, fuel production sector also relates to the activities of the people, such as: agriculture, fishing, industry, households, and others. If the fuel sector increased production costs will go up, and people can turn off the production sector.

Rising fuel prices also affect the industrial sector. This will drive increased production costs. And, for employers, so the profit margin is maintained, the choice: raise the price of goods produced or cut wages.

Increases in the prices of goods, especially basic needs, eroded the purchasing power of the people. Labor costs also eroded. As the fuel price hike in 2013, the purchasing power of the workers was eroded to 30%. Rising fuel prices led string length increases transportation costs, rent increases for rent, and the rising cost of living. The programs provided to the government to cope with the increase of fuel price increases as additional budget allocation for agriculture, construction, education, and health is not substance.

Indonesia is rich in energy. The problem of our energy resources controlled by foreigners: about 85-90% of our oil fields controlled by foreign companies, 90% of our gas production is dominated by six foreign companies, and about 70% of our coal production is controlled by foreigners.

Besides the fuel price increase is merely a disguise for the government to encourage the liberalization of the downstream sector. FYI fuel subsidies distort market mechanisms fuel sales. So foreign corporation difficult to compete in retail outlets in the country. If the price of fuel to be promoted by the Government, foreign retail outlets will be vying to get into the Indonesian market as Shell (Netherlands), Petronas (Malaysia), and Total E & P (France) and now public refueling channel (gas stations) belong to the third foreign companies were ‘scattered’ in the Greater Jakarta area, and will be expanded to other cities in Java and Bali.

However, not only the three companies that will ‘play’ in the downstream oil and gas business in Indonesia. Oil and Gas Law enforcement post No.22 / 2001, there were about 105 foreign oil companies that obtain permission to establish retail outlets. Each company was given a ‘quota’ build about 20 thousand retail outlets throughout Indonesia. Type of fuel sold by fuel filling stations owned by these companies is dominated by a kind of high octane gasoline with PERTAMAX. Shell relies on 92 and 95 octane gasoline as its main commodity. Similarly Petronas. Malaysia sells 92 octane gasoline and 95 named Primax 92 and 95. While the total trade in branded fuel and Performance Performance 92 95. Both are 92 and 95 octane gasoline.

During this time, they did not sell a type of Premium gasoline, unless Solar that can be obtained in a number of gas stations owned by Shell and Petronas. This is because the price of Premium gasoline is still subsidized by the government so it is considered not profitable for them. Now, after almost equalized Premium fuel prices at market prices by the government, they certainly will not miss the opportunity to ‘voluptuous’ this.

Moreover, when considering the readiness of foreign oil corporations who rely on the trader from abroad (especially Singapore) as an oil supplier for them. Coupled with this easy foreign companies is to ‘play’ in the retail business of the country without specific requirements such as the obligation to invest in the construction of oil refineries. Of course this will have an effect on their sales prices that can ‘compete’ with Pertamina, premium price.

The correlation between the increase in fuel prices by foreign interests are obvious, especially when reviewing the linkages between this policy and the liberalization of the retail sector of oil and gas. This is actually not surprising because this policy is strongly associated with the Oil and Gas Law No.22 / 2001 which mandates the liberalization of the downstream oil and gas. Meanwhile, the birth of Oil and Gas Law itself is very viscous dominated the role of foreign institutions.

It’s no secret, when in 2001, the US government funding agency, USAID donates US $ 4 million (USD 40 billion) to assist the Government of Indonesia to implement the policy of ‘reform’ oil and gas sector. It was recognized themselves in their documents. The same document also mentions that in 2001, USAID plans to provide funds worth 850 thousand dollars, or USD 8.5 billion to support non-governmental organizations (NGOs) and several universities in conducting studies on the removal of subsidies on fuel and leaded gasoline.

As noted economist Ichsanudin Noorsy, the policy of ‘adjustment’ prices with the market mechanism remains a government program in accordance with the instructions of the donor agencies like the World Bank. It manifests in Blue Print Management Agency and Gas (BP Migas) in 2004-2020. Based on the blue print, established in 2010 as a stage free market in oil and gas industry, particularly in the price level.

So, it is clear that if the policy of fuel price increases is the ‘order’ of foreigners who want to dominate the fuel retail business in Indonesia. Reason ‘noble’ behind this policy, budget austerity looks like nothing more than a mere deception, because the state budget is even more burdened by government debt.

Based on the ‘evils’, the policy of increased fuel prices as part of efforts to liberalize the downstream oil and gas must be rejected. This policy is just ‘green light’ for foreign firms to reap benefits from the national oil and gas industry. In addition, the campaign’s rejection of the fuel price increase should be accompanied by demands repeal of Oil and Gas Law No.22 / 2001-leaning liberal. For rules that became the root of the problem tree ‘twine’ oil and gas industry of the country, the foreign domination from upstream to downstream.

In addition to the impacts that are triggered by rising fuel prices above, we also have a Homework (PR) of the national energy policy related to creating energy sovereignty. That is, the question of current fuel must be the gateway to fix our energy policy that is still in shambles and harm the nation.

First, we must fight back our energy policy in accordance with the constitutional mandate, namely Article 33 UUD 1945, to create energy sovereignty. For that, we must fight for the abolition of all regulation that causes our energy governance in shambles, such as Act No. 22 of 2011 concerning oil and Act No. 4 of 2009 on Mineral and Coal Mining (Mining).

Second, ending foreign domination in control of the national energy wealth, such as oil, gas, and coal, either through nationalization or renegotiation. The way nationalization does not mean expropriation by force, but can mimic the way Chavez in Venezuela, the country buy back its shares at “market price”.

Third, encouraging priority use of national energy wealth to national needs. For example, to end the dependence on fuel, the government should have thought of conversion to CNG fuel (gas). Only, so it could be done, habits exporting gas at low prices should be ended.

Fourth, to revitalize the national oil and gas company, Pertamina in this case, so that you can maximize the management of natural resources in line with the national interest and correlated with the prosperity of the people. Of course, this is done by improving the management of Pertamina, combating corruption and practice broker / insider trading, and strengthening the productive capacity of school.

Fifth, encourage the development of oil refineries to produce new fuel for domestic needs. With the new factories, there are two benefits to be had: First, we no longer export crude oil we went out and then bought back by higher prices. Crude oil that can be processed in factories. Second, we do not need to import more fuel, but enough to buy crude oil. Of course this step is more efficient than importing fuel.

Sixth, encourage the development of renewable energy, such as solar energy, biomass, hydropower, wind energy, geothermal, hydrogen, biodiesel, bio ethanol, and others.

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