Fuel Price Hike: Is Petronas Guilty?

A few days ago, Malaysia Today posted an article titled "Petronas Could Go Bust By 2018". The article is originally written by Wong Sai Wan of The Star newspaper.

For those of you who don't have the time to read the whole article, it mainly suggested that Petronas will go bust within 10 years if all of its profits are handed to the Government to continue subsidizing fuel. Petronas CEO, Tan Sri Hassan Merican later talked about how production costs have increased in oil exploration and such.

People, of course, are hot happy with these kinds of statements since they seem to justify on the recent fuel subsidy restructuring (read: fuel price hike). But, Petronas will go bust by 2018 ONLY IF ALL of its funds are channeled to the government. So far, the government has NEVER taken ALL of Petronas' profits since 1974, the year Petronas was formed.

However, people got mad because they thought CEO Hassan Merican was making a statement that supported the fuel price hike. And so they wrote nasty comments.

From the comments just below the article, I was just amazed at how ignorant Malaysians truly are. I, too, do not know everything about the oil industry, but when people do not actually understand the situation and at the same time trying to sound smart, they start writing comments that ask people to boycott Petronas and write really stupid questions like "Then why does Petronas spend so much in oversea research for oil resources in corporation with foreign companies?". One fella also questioned "what really Petonas really benifit rakyat???" (See, this fella even had two typos in one sentence) Sheeeesh, I thought I was dreaming when I saw this.

But, you know what, I guess I can't blame people for not knowing how the industry works, but at least I think they should not try to write anything if they don't know facts. Since I am taking Petroleum Engineering as my major and at the same time being a Petronas scholar, I admit such remarks about Petronas only made me feel angry.

Regarding the fuel price hike, people might want to know that Petronas doesn't earn a single cent on the recent subsidy restructuring. In fact, due to the higher prices, local oil sales might even drop and thus reducing Petronas' revenue. So, NO, the price hike has nothing to do with Petronas. In this case, the ONLY party that saves money (RM13.7 billion in total) is our government because now the government no longer has to pay the subsidies to Petronas whenever we go to the gas stations to top off our tanks.

Petronas is just Malaysia's national oil company and it didn't play any role in the fuel price increase, so please stop blaming the company for the current inflation that's storming the country.

Drilling for oil nowadays DO cost much much higher than before (especially offshore) because all the conventional "easy" oils have been discovered and what's left for us to play with is just the small pockets of reservoirs deep deep down below. Bringing the oil to surface is not as simple as "poking" a hole on the ground today and selling the oil the day after that. Some could even take years (I personally believe this is the reason why oil price kept increasing lately due to the time lag the supply needs in adjusting itself to the currently high market demand). Thus, it's clear that whatever Tan Sri Hassan Merican said does hold truth. He at least knew what he's talking about.

So, people, let's not boycott Petronas since that's such a baseless idea it would only bring adverse effects to the country. The one to be blamed is not Petronas but whomsoever that mismanaged the funds channeled by Petronas. You see, when the money is not well managed (due to corruption, etc etc), the country runs out of it and so, now to save more money, the subsidy is being taken away. Well, to know more, do your own research using Google. I prefer not to talk further details about this or I'd just risk my scholarship being taken away or my whole blog being scraped.

Alright. Til my next post, take care, everyone.