ID :
35530
Sun, 12/14/2008 - 00:34
Auther :
Shortlink :
https://oananews.org//node/35530
The shortlink copeid
Year-ender: GOVT MOVING AT SNAIL'S PACE TO DECIDE FUEL OIL PRICES
By Andi Abdussalam
Jakarta, Dec 13 (ANTARA) - After sky-rocketing from US$120 a barrel in May to US$147 in July, the world crude price fell to about US$40 a barrel this month, leaving the government confused about how to readjust domestic oil prices.
When the crude price in the world market hovered at US$120 a barrel in May, the government decided to raise fuel oil prices at home in order to keep its fuel oil subsidies down.
After transportation and production costs as well as commodity prices had escalated because of domestic fuel oil price increases, the world crude price made a U-turn, while the government, amid mounting public clamor to respond to the downturn, is still moving at a snail's pace. Though it lowered the subsidized premium gasoline price early this month, yet many saw the reduction as insignificant.
"The government is still waiting for stable trends in the world market to determine the economically realistic level of domestic fuel prices. As soon as we know the realistic level, we will announce it," Energy and Mineral Resources Minister Purnomo Yusgiantoro said here on Friday.
Oil and Gas Director General Evita Legowo said meanwhile that the government was still studying the lowering of fuel oil prices but her office had found that the economically realistic price of diesel oil was still above the subsidized price of Rp5,500 per liter.
Previously, based on the calculations of the energy and mineral resources ministry, the economic price of premium gasoline on December 1, was Rp4,800 per liter or below the subsidized price of Rp5,500 a liter.
Calculations of the fuel oil prices for January 2009 would be based on the average price of oil prices and exchange rates from December 1 to 31, 2008.
The world crude price has dropped by US$100 a barrel within a period of less than five months since it was recorded at US$147 per barrel in mid July 2008. The price now is about US$40 per barrel and showing a continuous downward trend.
When the world crude oil price hovered at US$120 a barrel (increasing US$95 in January), the government decided in May 24, 2008 to raise fuel oil prices by an average 28.7, in order to withstand fuel oil subsidy which could reach Rp125 trillion.
It raised the price of premium gasoline from Rp4,500 to Rp6,000 per liter, diesel oil from Rp4,300 to Rp5,500 and kerosene from Rp2,000 to Rp2,500.
With the price increases, the government was expected to be able to save up to Rp25.877 trillion in fuel oil subsidy funds from the state budget.
In the meantime, it also allocated Rp14,1 trillion for a cash transfer program for some 19,1 million low-income families across the country. The assistance was meant to protect the poor from the impact of the fuel price increase.
Even though the government had raised fuel oil prices by an average of 28.7 percent in May, the world crude price continued to skyrocket until it reached its peak at US$147 a barrel in July that pushed up the amount of subsidy.
According to Evita Legowo, the government has pushed up the amount of subsidy for fuel oils. The realization of subsidized budget up to October this year has reached Rp130 trillion, exceeding the subsidy target set at the 2008 revised budget at Rp126 trillion.
Luckily, after reaching its peak in July, the world crude price began to decline.
After all, bubble of financial crisis exploded in the United States. In October, crude prices dropped to US$90 a barrel following fear that the financial crisis in the United States would spread to other countries even though the US government had provided a US$700 bailout package for collapsed financial institutions.
In that conditions, observers warned it may push down the crude prices to US$70 a barrel at the end of the year, cutting state revenues from oil by Rp30 trillion.
On October 6, the price of 'light-sweet' oil in main contract trading in New York had fallen to US$87.81 per barrel for November shipment, and in London, the price of "Brent North Sea" dropped to US$83.68 per barrel.
In line with declining prices of crude in the world market, pressures at home that the government should lower fuel oil prices mounted.
Thus, the government on December 1, 2008 decided to cut the price of subsidized premium gasoline by Rp500 from Rp6,000 per liter effective December 1, 2008, but maintained the price of diesel oil at least until December 31.
It has promised, however, to lower diesel oil price in January and considered cutting again that of premium gasoline. The rates have yet to be announced.
"The government will review fuel oil prices each month," Energy and Mineral Resources Minister Purnomo Yusgiantoro said. ***2***
Jakarta, Dec 13 (ANTARA) - After sky-rocketing from US$120 a barrel in May to US$147 in July, the world crude price fell to about US$40 a barrel this month, leaving the government confused about how to readjust domestic oil prices.
When the crude price in the world market hovered at US$120 a barrel in May, the government decided to raise fuel oil prices at home in order to keep its fuel oil subsidies down.
After transportation and production costs as well as commodity prices had escalated because of domestic fuel oil price increases, the world crude price made a U-turn, while the government, amid mounting public clamor to respond to the downturn, is still moving at a snail's pace. Though it lowered the subsidized premium gasoline price early this month, yet many saw the reduction as insignificant.
"The government is still waiting for stable trends in the world market to determine the economically realistic level of domestic fuel prices. As soon as we know the realistic level, we will announce it," Energy and Mineral Resources Minister Purnomo Yusgiantoro said here on Friday.
Oil and Gas Director General Evita Legowo said meanwhile that the government was still studying the lowering of fuel oil prices but her office had found that the economically realistic price of diesel oil was still above the subsidized price of Rp5,500 per liter.
Previously, based on the calculations of the energy and mineral resources ministry, the economic price of premium gasoline on December 1, was Rp4,800 per liter or below the subsidized price of Rp5,500 a liter.
Calculations of the fuel oil prices for January 2009 would be based on the average price of oil prices and exchange rates from December 1 to 31, 2008.
The world crude price has dropped by US$100 a barrel within a period of less than five months since it was recorded at US$147 per barrel in mid July 2008. The price now is about US$40 per barrel and showing a continuous downward trend.
When the world crude oil price hovered at US$120 a barrel (increasing US$95 in January), the government decided in May 24, 2008 to raise fuel oil prices by an average 28.7, in order to withstand fuel oil subsidy which could reach Rp125 trillion.
It raised the price of premium gasoline from Rp4,500 to Rp6,000 per liter, diesel oil from Rp4,300 to Rp5,500 and kerosene from Rp2,000 to Rp2,500.
With the price increases, the government was expected to be able to save up to Rp25.877 trillion in fuel oil subsidy funds from the state budget.
In the meantime, it also allocated Rp14,1 trillion for a cash transfer program for some 19,1 million low-income families across the country. The assistance was meant to protect the poor from the impact of the fuel price increase.
Even though the government had raised fuel oil prices by an average of 28.7 percent in May, the world crude price continued to skyrocket until it reached its peak at US$147 a barrel in July that pushed up the amount of subsidy.
According to Evita Legowo, the government has pushed up the amount of subsidy for fuel oils. The realization of subsidized budget up to October this year has reached Rp130 trillion, exceeding the subsidy target set at the 2008 revised budget at Rp126 trillion.
Luckily, after reaching its peak in July, the world crude price began to decline.
After all, bubble of financial crisis exploded in the United States. In October, crude prices dropped to US$90 a barrel following fear that the financial crisis in the United States would spread to other countries even though the US government had provided a US$700 bailout package for collapsed financial institutions.
In that conditions, observers warned it may push down the crude prices to US$70 a barrel at the end of the year, cutting state revenues from oil by Rp30 trillion.
On October 6, the price of 'light-sweet' oil in main contract trading in New York had fallen to US$87.81 per barrel for November shipment, and in London, the price of "Brent North Sea" dropped to US$83.68 per barrel.
In line with declining prices of crude in the world market, pressures at home that the government should lower fuel oil prices mounted.
Thus, the government on December 1, 2008 decided to cut the price of subsidized premium gasoline by Rp500 from Rp6,000 per liter effective December 1, 2008, but maintained the price of diesel oil at least until December 31.
It has promised, however, to lower diesel oil price in January and considered cutting again that of premium gasoline. The rates have yet to be announced.
"The government will review fuel oil prices each month," Energy and Mineral Resources Minister Purnomo Yusgiantoro said. ***2***
