Economy

Diesel solution to high oil prices

With regards to the government saying ‘there is no other way’ but to reduce the oil subsidy, with due respect, I say there is a better way out. 

The authority in charge does not have a clear understanding of the whole issue. The focus should be on the reduction of oil consumption. The trick is to be smart like the Europeans. About six months ago, Minister in the Prime Minister’s Department Mustapa Mohamed claimed that Malaysia produced 700,000 barrels of crude oil a day and our domestic daily consumption was 520,000 barrels a day. This means that our export was 180,000 barrels per day.

Now, Deputy Prime Minister Najib Razak has said that our production is stagnant at 650,000 barrels per day and we export a small quantity of 75,000 barrels a day. This means that our daily consumption has gone up to 575,000 barrels per day and our export is reduced significantly. He also warned that if this trend is left unchecked, we will be a net importer of oil in four years time.

The question to ask now is why are the Europeans using more diesel-powered vehicles? We can save several billion ringgit a year without having to increase oil prices if we just follow the European practice. We just need to increase the number of diesel passenger cars in Malaysia. In Europe, about half of the vehicles currently sold are diesel powered. And in Austria, it’s over 71 percent.

There are several contributory reasons why the uptake of diesel powered cars has risen at such a rate. They include, much better fuel economy, cleaner emissions, better drivability and easier maintenance. Diesel fuel itself has many attributes that make it such an effective source of power and these include its safety and performance aspects.

Unfortunately, our government does not seem to understand and appreciate the benefit of using more diesel vehicles. You can now see how illogical it is for the government to increase the price of diesel more than that of petrol on the last few occasions as if the authority intentionally wants to penalise diesel users.

The focus must be on the reduction of fuel consumption and this objective can be achieved by encouraging more diesel-powered cars on the road in place of petrol-powered cars. Bearing this in mind, the government should immediately take the following steps to speed up the use of diesel cars:

  1. For a start, the government should issue new APs for the import of diesel-powered cars with reduced import duty.
  2. The road tax for diesel cars should be reduced to be equal or cheaper than that for petrol cars.
  3. As all local car assemblers do not manufacture whole car engines, they would import more diesel engines if there is a demand. Perhaps the reduction of import duty for diesel engines will encourage people to buy diesel-powered cars.

With these incentives, more people will automatically prefer to buy diesel cars to save money. Like in Europe, eventually, there will be more diesel cars than petrol cars and more oil can be saved. With the additional export earnings, the government may not have to increase local oil prices so often.

The government should focus on earning more foreign money instead of continually increasing local oil prices to make money from poor Malaysians. Our government cannot remain unaware of the European trend. Our government must be smart and bold enough to quickly formulate policy changes to promote diesel cars. This policy change may hurt a few businessmen but it will please the whole nation.

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