June 15, 2008

Low Interest Loans, Carpools, People Try It All

IT'S a delicate balancing act in many countries as they decide on how much of the enormous rise in oil prices they can absorb and how much to pass on to the people.

In Indonesia, a country of 220 million people where at least 40 million exist on 20,000 rupiah (RM7.03) a day or less, the government obviously did not absorb enough.

The announcement of domestic price hikes - an overnight increase of an average of 120 per cent - saw angry citizens taking to the streets.

Unleaded petrol rose from 2,450 rupiah (RM0.86) per litre to 4,500 while kerosene, used for cooking, is up from 700 rupiah per litre to 2,000 rupiah, an increase of 186 per cent.

The government was left with little choice, as the combination of high international oil prices, growing domestic demand, increasing oil imports and declining domestic oil production due to low levels of investment threatened to blow up its subsidy to RM45.8 billion.

The government, however, came up with a cash handout scheme worth RM4.91 billion for the country's poorest.

In India, the government tried to cushion the blow of the fuel price hike by encouraging state governments to cut their excise duties and sales taxes.

The government had increased petrol, diesel and domestic liquefied petroleum gas prices by 10 per cent and partially compensated the public sector oil marketing companies that are suffering heavy revenue losses due to selling petroleum products below the cost price.

Several states have announced duty cuts of between around two and five percentage points, while others are expected to follow suit, moves that will come at the expense of their own budgets and of efforts to curb demand for fuel.

In China, the government is considering halting its efforts to produce petroleum by liquefying coal due to concerns about cost and energy efficiency.

The government had earlier announced plans to invest 100 billion yuan (RM42.56 billion) to build the largest Asian facility to make diesel fuel from coal.

In Australia, the fuel price hike left its airline, Qantas in a bind as the airline was forced to undertake measures such as laying off staff and reducing services.

The airline said it had failed to bridge the widening cost gap, despite fuel surcharges, fare increases, a fuel hedging strategy and a recruitment freeze.

In the United States, where petrol prices are around US$4 (RM13.10) a gallon, it was reported that certain northern states such as Vermont have set up a task force to help people deal with the rising fuel prices.

The state is establishing a no or low-interest programme to help people insulate their homes from the cold weather and educate home owners on ways to heat their homes.

The state has started a website where people can post car pool messages, map out bicycle routes as well as publicise petrol stations that offer the cheapest petrol or diesel.

Maine, a state which has the highest rate of heating oil use in the US, offers residents low-interest loans to help with repairs that improve energy efficiency.

It also provides rebates to homeowners who buy solar panels and provides loans to low-income residents who have trouble paying their heating bills.

In Japan, the government had not waited for the present oil crisis to cut down on consumption - oil consumption has dropped by 15 per cent over the past 12 years.

The country's consistent drive for energy efficiency and alternate sources has set the stage for other countries to emulate.

By 2006, Japan produced almost half of the total global solar power. Its steel industry produces one tonne of steel using 20 per cent less energy than in the US and 50 per cent less than China.

Companies have been working to make their electronic consumer items and factories more energy efficient.

They have also been producing fuel efficient cars and are the leading producers of hybrid cars, which combine internal combustion engines with batteries, or hydrogen cells and petrol.

* Saudis increase oil production in view of world protest: P45

* Global rage at fuel price hike: P46

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