Oil, steel prices plunge – but second bridge still RM4.6b?


The crude oil price has dipped below US$50/barrel. Similarly the prices of other commodities have plunged. Steel prices, for instance, have crashed from $1,200/ton in June to below $300 – and it is likely to fall even further with demand from China expected to weaken.

Now the question is how low can these commodity prices go?

The speculative boom run in commodity prices began in 2001-2002, when oil broke the $30 barrier.

Certain analysts are now suggesting that we are now only half way down the road back to that trough. So commodity prices still have room to fall further and they could continue sliding until the end of 2009. But it is hard to say if oil will approach the $30 region given that it is getting harder and more expensive to find new global oil reserves.

Anyway, I heard on the radio that the government is intending to further cut oil prices.

The more immediate issues are:

Shouldn’t we immediately reduce oil prices to RM1.80 at the most. Why wait?

Shouldn’t electricity tariffs be reduced now?

You know I am against a second Penang bridge for private motor vehicles because I believe it will result in further congestion on the island. (On the other hand, it would be great to have a cross-channel public transport rail link over a shorter distance, perhaps near the present bridge, and an expanded ferry service.)

But then some quarters seem to like all these mega highway and road bridge projects and they prefer not to think about how congested the island will be after 5-10 years, with 5-6 lanes of traffic (from two bridges) pouring into the island.

That said, with steel and other building material prices now plunging, why is the estimated cost for the new bridge still RM4.6 billion, which some people were saying was too expensive even before the slump? Shouldn’t the cost be a lot lower now? Certain firms are going to make some fat profits, I would imagine.

On another note, if only a larger proportion of the toll from the Penang Bridge was ploughed back to Penang, wouldn’t that do wonders for the state and its people, provided it’s not splurged on other ill-conceived mega projects?

Is it true that the Penang state government once wanted to take over the Penang Bridge, but was told it would cost an exorbitant sum to take over? But the bridge concession was later taken over by a private firm to manage (at a lower price?). Perhaps the folks in Gerakan could clarify this.

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OM Saigal
31 Jul 2014 11.42am

Who is supporting CAP, SAM and the NGOs to fight fair for all of us?
Perhaps those brave retired lawyers & graduates must act now and not criticise later, Bob Marley sang, “Action speaks louder than words”……..

23 Nov 2008 9.24pm

Dear Anil,

Have mercy on those people.

If they lower the bridge price too much, their children can’t stay in their European castle anymore.

Have mercy, Anil, have mercy !

22 Nov 2008 7.02pm

The second bridge is needed, however, at what cost ? Since economy recession, The price for raw material has decreased, therefore the cost to build the second bridge should be lower !

In addition, the rail transit system should be build together with the bridge, so that people can take public transport such as the rail transit system, bus, and taxi from island to the mainland or vice versa.

22 Nov 2008 6.35am

Its like food lah, now, despite lower fuel prices, food items still remain high. Dig deeper and you will surely find that the distributor of the particular food item, the company is either owned by the cousin or the sister of the politician’s wife or the politician’s nephew (for example) This is how things work is Malaysia. So, high prices will always benefit a small group of people. Ever wondered why we are encouraged to use Petrol when diesel is a much cleaner fuel giving double the mileage? Ever wondered why for every 1 petrol car Mercedes or BMW sells… Read more »

21 Nov 2008 11.16pm

sori typo afterall

21 Nov 2008 11.15pm

Wait has anyone thought that we will have the most expensive bridge ever built based on per km,aiya anil after we Malaysia bolih ma.

Johnny Cheah
Johnny Cheah
21 Nov 2008 10.35pm

No! you can bet your last dollar the cost for the 2nd Penang bridge will remain as it is even though prices of building materials have dropped drastically. The government will tell you that the quoted price is binding. But in the event prices of the building materials shot up they have a clause in the contract agreement that the company can negotiate with the government to increase the cost. And the government will obliged. You know lah this is Malaysia

21 Nov 2008 5.01pm

The Gov that we elected to office in the last election is hiding alot of things from us. For example, from day one when they increase the petrol price, they just refused to reveal to us how they calculate the petrol price. Until today the rakyats are being kept in the dark. And now after knowing that the petrol price is cheaper in US they are telling us that the Gov. is saving billions of ringgits in subsidies. And lately the Gov refused to lower the price of petrol further saying that they have the right to make profit. Mr… Read more »

21 Nov 2008 4.18pm

The cronies have to get their guaranteed profits-lah…

That’s the problem with a system where you can’t differentiate the boundary between the government and the contractor.

In a true hands-off system, the government (or any other developer for that matter) would be the first to be pressurising the contractor for a drastic reduction in costs.

21 Nov 2008 3.28pm

As long as the federal guomen never change, anything they touch will be inflated. To hell with the low prices of raw materials, they couldn’t be bother.The most important thing is they must take care of their crony company(who is also forcing people to drive at night,and couldn’t be bother with the lives of the people)first, and of course, their own pockets.

It’s the rakyat who is going to pay for the exorbitant cost and the toll fee till their next generation for the next 50 years.

21 Nov 2008 2.24pm

Very good point. The costs should be very much lower now.

21 Nov 2008 1.45pm

Sounding rather irritated today Anil, trust all is well. Anyway, I have stopped commenting on clearly very easy to comprehend and understand issues because they are not interested. Say what you like, they will do as they please and they have been doing this for the last 50 years. Till we get a new federal gormen, there is very little hope left. Even if we do get a new govt, we still have to wait and see if they will see issues like we see them. What you say above is simple, practical, cost less money and benefit more people.… Read more »

21 Nov 2008 1.37pm

When the Penang 2nd bridge was increased by x bil to y bil, what was the inflation rate for same product n services? Then the govt said inflation was xx%. The bloody inflation rate for Penang 2 bridge was double digit (big one some more). What was the inflation rate quoted by gomen?

I doubt there will be significant savings for Penang 2nd bridge despite the lower steel n cement prices. We wait and see if the gomen is serious to change for the better.