18 June 2008

Fuel Prices At The Pump

The Indonesian government's recent decision to jack up the fuel prices here in Indonesia was met with some isolated but fierce demonstrations. Isolated because many of them were one off and have yet to be repeated. This tends to give the impression that in most cases the demonstrators were of the rent-a-crowd variety.

Nevertheless, the reduction of the fuel subsidies is going to have a significant impact on the great number of Indonesians living on or under the poverty line. Estimates put this figure at somewhere near 40 million people. The jacking up of the fuel prices is going to impact on the middle and upper classes as there is likely to be fuel-based inflation in prices of most goods. Yet, the impact will be minor compared to others.

In any event this got me to thinking. Australians, at least Sydney-siders, are now paying record prices for fuel at the pump. The price last night in Sydney has reached 171.9 cents a litre. When I left my homeland the price of fuel at the pump was under AUD 1. How times have changed!

The thinking part comes on this point though. Indonesians are now paying around IDR 6,000 a litre for fuel. Considering they were paying IDR 2,500 a couple of years ago this is a significant hike. Nevertheless, if the 171.9 cents per litre is converted to IDR, then Australians are paying the equivalent of about IDR 16,000 per litre. Indonesians have still got it good in that sense.


GJ said...

What price rise???

Doesn't everyone's company pay??

It's a joke Joyce!!!!

Rob Baiton said...

Maybe it is, maybe it is not?

Does your company pay? :D

Polar Bear said...

There are global political moves afoot to dissuade governments from subsidising prices. I can see both sides of the argument. Open trade barriers (against which I argued long and hard, and still do) work only is there are no artificial influences on an economy. The greatest influences are the protectionist ones, high import taxes etc. but any commodity subsidy then assist in keeping production or market costs artificially down is anti competitive behaviour.

On the other hand without the subsidy Indonesia will be in deep sh1t

Rob Baiton said...

Indonesia is in big trouble with and without the subsidies...

Canny Squirrel said...

It's the same here in Edinburgh Scotland
Prices were at 89p per litre last year they are now at 125.9p per litre!!

It's mad!

I have a petrol poll on my blog www.cannysquirrel.com



Rob Baiton said...

Canny Squirrel...

Thanks for dropping by and leaving a comment. I will check your site out later today / evening.

Fuel in Indonesia remains heavily subsidized. The reduction in the subsidies by my reckoning still sees fuel in Indonesia at a bit more than a third of what you would pay for the same stuff in Australia.

Although, I would have thought the economists would have been able to model this out and therefore this sharp rise in prices should not be a surprise to some.

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