Many analysts have mixed views on fuel subsidies. Some think the fuel subsidy should be withdrawn for several reasons. Subsidy has been increasing from 2001 and will surge to RM35 billion in 2008. On April 9, crude oil broke another record high of US$112 per barrel and our Malaysian government will soon increase the fuel price and reduce the subsidy. I wish to present an idea which the government can develop to solve the petrol problem and save the country several billion ringgit a year.
The idea is based on increasing the proportion of diesel passenger cars used in Malaysia. In Europe, more than 50 percent of vehicles currently sold use diesel. In France and Belgium, that figure is even higher at 67 percent and in Austria it is over 71 percent. There will be more and more diesel cars as time goes by. Europe’s diesel car share is predicted to jump to significantly higher levels by 2010, to the point where the vast majority of new cars sold in Europe will be diesel powered. Why dieseled-powered cars?
There are several contributory reasons why the use of diesel-powered cars has risen at such a rate.
1. Much better fuel economy – The diesel engine is the most fuel efficient of all internal combustion engines and consumes 30-50 percent less fuel than petrol-powered cars.
2. Cleaner engines which produce less harmful gases (such as carbon monoxide, hydrocarbon and carbon dioxide) – 25 percent less than petrol-powered cars, which also produce particulate matter and nitrogen oxides (the reason we see so much black smoke churned out by lorries, buses and taxies on the road is that these vehicles are using petrol and not diesel).
3. Significantly improved driveability and performance due to recent advances in diesel technology. This translates to far better overtaking and acceleration figures, making them even more attractive to drivers. Superior engine torque at lower engine speeds also results in reduced noise levels
4. Diesel engines are far more durable and are cheaper to maintain
Although Malaysia is not a signatory to the Kyoto Protocol for reduction of greenhouse gases, we should co-operate with the United Nations to reduce global warming by burning less fossil fuel.
Diesel fuel itself has many attributes that make it such an effective source of power. These include:
Safety – Diesel is a safer fuel than gasoline or other alternatives. It is less flammable and less explosive than gasoline.
Energy content – Diesel contains about 30 percent more energy per gallon than gasoline
Performance – Diesel has a greater power density than other fuels: it packs more power per unit volume than other fuels
These are some of the well-established reasons why so many European consumers choose diesel engines over petrol. We Malaysians should realise the potential in the modern diesel engine and act now to take advantage of its benefits.
Unfortunately, our present road tax structure in Malaysia is set at a level that penalises the ownership of a diesel car. Diesel passenger car owners have to pay higher road tax than the equivalent of a petrol car. On the other hand, the import duty for diesel passenger cars is lower than the import duty for all petrol passenger cars. Diesel sold at the pumps is cheaper than petrol.
Diesel for industries, which we should encourage, costs about double the price of that for motor vehicles. Fishermen pay less for their diesel. That is why there is so much of smuggling and law enforcers frequently close both eyes and as a result, all the pumps are frequently short of diesel for sale.
All these illogical pricing systems need immediate overhaul. Otherwise, the Malaysian government will continue to appear to seem indifferent to reality.
In Europe, road taxes for diesel and passenger cars vary only slightly and the prices for diesel and petrol are about the same. A structure similar to this would encourage Malaysians to buy diesel cars and avoid all this confusion. How huge are the savings?
As I said at the beginning of this letter, the fuel subsidy for this year alone will be RM35 billion, but I do not know how much of that figure is actual cost and how much is the loss of revenue and profit.
Suffice to say that the savings will amount to billions of ringgit per year by just the burning of less petrol fuel and with more use of diesel engines while at the same time reducing pollution. I trust some influential readers will urge the government to quickly overhaul all the illogical pricing systems.