The global crude oil price is now US$36 barrel. In contrast, the local pump price is still relatively high at RM1.80/litre – despite a fifth reduction in price on 15 December since a 41 per cent hike in June.
It’s obvious that the pump price is now higher than the real market price; in other words, the higher price is a form of consumer tax (as opposed to a subsidy previously). Now, it is the government’s prerogative if it wants to impose this kind of tax.
But what is it going to do with this surplus?
Will it be set aside in a fund to cover future losses i.e. in case the government decides to subsidise oil some time in the future? Or will the government use the profit for a stimulus package to spur the economy? Or will it use it for research into solar and other renewable energy? Or will the profit be used to finance public transport infrastructure projects?
Whatever the case, there needs to be accountability, transparency and a public debate on how these excess funds are used. So far, there has been little of all three.