Chain Letter: How to Drive Petrol Prices Down

Oil Price

Recently, I have been receiving e-mails on how to drive petrol prices down. There are a number of variations of the e-mail. The first one is about boycotting the big players like ESSO/MOBIL, SHELL, PROJET and opt for the so-called small players like CALTEX and PETRONAS. This way, we can make the big companies bleed, and thus bringing petrol prices down. This idea supposedly came from people from PETRONAS. They regard this idea as “price control”. This idea was also supported by somebody that goes by the name of Phillip Hollsworth (try google-ing this name, and you won’t even find a trace of this bugger).

The second e-mail variation is about boycotting petrol as a whole for a certain period of time.

Now in this article, I’ll explain to you why not in a million years these concepts will work. By the way, I’ll be using the words fuel and oil interchangeably.

Firstly, we need to understand that fuel is a necessity (need) and not a luxury (want). At this day of age, it is impossible to go through your day without encountering fuel or fuel-induced goods and services.

Also, we are talking about boycotting from the consumers’ end that utilises cars and motorcycles. Quoting from the blog of a friend of mine, Wei Hao, he said, “do you know how much fuel an airplane burns with a single engine?” So, boycotting fuel means the need to boycott Air Asia, Malaysia Airlines and not to forget Proton and Perodua, our very own makers of machines that use fuel. Let these companies suffer and go belly up. Let our government loses its tax revenue from these companies and go belly up as well. Boycotting fuel is the same as condemning the whole economy. Well, who cares right? As long as we are able to drive oil prices down.

Talking about boycotting, let’s talk about an issue that was “hot” barely a year ago in Malaysia. The issue on Starbucks being an Israel symphatiser. This was during the Lebanon-Israel conflict. There were rumours about boycotting Starbucks for channeling their money to Israel. What ever happened to that? As far as I know, Starbucks’ stores in Malaysia are still going strong, with more Malaysian frequenting Starbucks than ever. Now, if we can’t even boycott coffee, which is a luxury, how can we boycott necessities like fuel?

It’s also like wanting to boycott rice, or minyak masak (cooking oil), or tepung (flour). Malaysian’s news network are always flooded with news on prices of these items going through the roof. Anyone willing to boycott rice, minyak, tepung, gula (sugar), and garam (salt) ?

In fact, if we do decide to boycott fuel, then we pretty much need to boycott rice, tepung, garam, gula, and minyak masak as well. Why? Well, think about it. How do you think these goods get transported to grocery stores in the first place? By trucks? By shipping containers? What do these modes of transport use then? Firewoods? Steam engines? Hell no. They use fuel! Starting from tomorrow, let’s boycott store-bought food. Now, let’s rear our own chickens, cows, ducks, and grow our own vegetables, and paddy fields. And remember, to acquire seeds and offsprings of the stated vegetables and animals, don’t use your cars. Because cars use fuel!

Talking about fuel, we also have to talk about electricity. Electricity power grids also require energies such as fuel. Anyone for boycotting Tenaga Nasional Berhad (TNB)? Nope, didn’t think so.

Fuel is the backbone of any country, no one can doubt that. Nearly every industries, if not all, require the service of the so-called Black Gold. Like I said before, boycotting fuel is the same as condemning the whole economy.

Not convinced yet on why boycotting does not work? Read on folks.

Companies like Exxon-Mobil, Shell, and Woodside Petroleum are companies that are well-established and well-diversified. These companies can go years on end without recording any profits. 5 to 10 years may be. Or even longer than that. Apart from cash reserves that they have, they also delve in other industries. They will be able to survive without the revenues from a minuscule of people not purchasing fuel from them, but the question is, can we survive without fuel for even 1 day?

A company called Golden State Foods is winding up in Malaysia after recording net losses for 5 to 6 years. Golden State Foods is not as big as those gargantuan fuel companies we are talking about and yet they are able to survive for so long. Now, logic tells me, can’t a bigger player survive much longer?

The e-mail also supposedly came from somebody in PETRONAS. They said, don’t purchase from the big players, but purchase from smaller companies like PETRONAS. Hahaha. Udang di sebalik batu anyone?

And don’t tell me about PETRONAS being a small company. They’re listed in the list of Fortune’s Global 500 companies for heaven’s sake!

Another issue to consider. Oil price is driven by supply and demand. Everybody agrees with this little fact.

Say, people did unite and boycott these fuel companies, driving demand down. These companies will respond by constricting supply, thus creating a balance in supply and demand to maintain the high price.

Remember, oil is not like biscuits that have expiry dates. They can cut oil supply, and keep those oil drums in storage until it’s time to flood the market again.

So, the question again. Can the human race survive without fuel?

What can we learn from this issue? Two things really. First, boycotting oil companies won’t work. Second, stop forwarding chain letters. Full stop.

(Image Source: Wikipedia.com)

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About nadlique

This blog is about the journey of a 28-year-old Malaysian towards financial freedom. This blog was started back when the blogger was 21 years old. However, his journey towards financial freedom had begun way before that. Materials such as investing, business, entrepreneurship, equities, and real estate are presented. The author also posts his thoughts and observations on life in general.

Comments

  1. Kalau kira marketshare, Shell no 1 petronas no 2.

    small player = bhp & caltex

    kalau nak tengok harga minyak rendah, cuba plotkan graf harga minyak nymex itu dalam euro.

  2. Look kawan, petrol memang necessity hidup kita. Tapi jika kita nak lihat consumption fuel/petrol turun, ini kena atas niat lebih murni banding nak jimat duit dalam poket sendiri. Kena ingat impak negatifnya terhadap ekosistem kita lebih seabad ini. Alternatif fuel kena kita cari dari sekarang. Betul, tidak semua alternatif viable. Jika tidak sekarang bila? Rezab minyak negara pun makin susut. Ada kata cukup untuk 15 tahun, ada kata 30 shj.

    Mungkin solar power jadi alternatif utama sebab wave ka, wind ka, semua itu takde kuat macam negara2 lain. Ada satu bandaraya di China buat syarat binaan baru kota adalah kena guna tenaga suria untuk setiap unit rmh yang dibina. It works dgn subsidi kerajaan. We in Malaysia got to start somewhere. Jgn nak sebut boikot je. Saya X suka boikot sbb yang kena orang kita juga. Yang kita boleh biat mungkin hanya cuba jadi lebih bijak rancang belian kereta kita (jgn tengok harga/cantik jer!), perjalanan dan consumption harian kita termsk elektrik, air, cara buang sampah dll.

  3. Sebab tu lah dalam artikel tu saya kata boikot tu tak jadi.

    Instead of boikot boikot boikot (yg memang menjadi lumrah hidup masyarakat Islam kita ni yang suka sgt memboikot), cari lah alternatif lain. Cari tenaga alternatif ke, ape ke, asalkan alternatif yang selain daripada mem-boikot.

    Cakap pasal boikot ni, saya ingat lagi dulu masa dok sibuk nak boikot barangan buatan mat saleh, kawan saya pun dok terikut jugak. Kononnya, nak ikut boikot sekali. Tgk tgk, kat rumah dia, penuh dgn barangan import, kat badan dia, penuh dgn hiasan designer brands. Cakap tak serupa bikin.

  4. haha.. that’s a good posting 🙂 you sure can link it to other issues well.. hehe

  5. Thanks 🙂

  6. Salam dari saya.
    I got a caution here-under certain conditions, boycotts work. But never for essentials. Mahatma G did a hartal, but if you remember, it was a boycott of British cotton, not wheat or rice!

    Petrol is one big headache in Malaysia. I remember 1 article I read saying we are a bunch of crazy car-lovers for a nation of 25 million.

    Why? See, the govt urge any Mat, Ah Seng & Samy to buy cars and banks offer cheap HP rates until 10yrs. We sell cars minus standard air-bags, we offer cheap road taxes, RM2 road tax for small cc bikes, and lo! diesel is still a ‘dirty’ word. Even if the govt cannot cut the price of pump petrol, we should have incentives to buy/use clean diesel. The technology is there.
    Bio-diesel? A friend in the industry is disgusted at the govt indecison on the subject. He joined an American-Indon outfit determined to see it being introduced in Indonesia instead. We need to use cleaner fuel, one candidate is bio-diesel. Even diesel as we know now is clean, only our refineries aren’t churning out enough the right clean diesel mix for our cars. So, the rakyat still believe diesel as a motor fuel is smelly, inefficient & crap. Yang crap tu hanya diesel refined here and perhaps, Singapore.

    Solar panels? To fix one on my Mum’s roof is exorbitant – but seriously, why can’t the govt help out here, give a subsidy to the tune of say, 10-20% of the cost? Just tax the smoking & drinking public to the ceiling to find more cents! And/or charge the car-loving rakyat additional tax such as garage requirements for private cars, COE for new car buyers etc. Maybe we can see better road manners and a cleaner urban environment sooner than later! Cheers.

  7. Salaam 🙂

    Perhaps, I should have said that boycotts do work under certain circumstances. And yes, not for essentials. Never for essentials.

    Talking about Mahatma Gandhi, he really did carry out his little mission successfully. But, I’m sure you have to agree that to find somebody of his stature nowadays is … very hard, if not impossible. He managed to disconnect himself with the pleasures of life, and finding that sort of person now in 2008, is like finding a 0.5ct diamond in the Pacific Ocean.

    Also, the fact that in this era of globalisation, trying to boycott one thing and just that one thing alone would be a gargantuan task. A lot of things is overlapping with each other these days. They are dependent (I stand to be corrected). Like I said in the article, to boycott fuel, we need to boycott this and that.

    Back to our oil price issue, the only viable way as I see it is to go for alternative energy sources. Some of them, as you have stated, biodiesel, and solar energy. Some subsidy from the government (like what the Oz government have implemented to encourage folks to install rainwater tanks) wouldn’t be such a bad idea.

    By the way, touching about ways for the government to offset the subsidy expenses, you mentioned about charging additional taxes for car users, and COE for new car buyers. I know that these are just some of the measures that could be taken but I just thought that it would make good sense to elaborate on that. Don’t you think that that would increase the price of owning cars massively? Would you agree if I say that that might have an adverse affect to our automobile industry especially for Proton and Perodua.

    Also, considering our nation is a car-loving nation (many times when you’re in a conversation with a fellow Malaysian, one of the first things they would ask is how much do you earn and what sort of car do you use), it would be a not-so-wise decision for the government, politically speaking.

    Anyway, these are just some of my thoughts.

    Wassalam 🙂

  8. Let set the day to boycott petrol, inform all Malaysians not buy petrol. The day that no one, if we all agree, is allowed not pump up the petrol. See if the oil industry players will really care about us.

  9. See, the thing is, boycotting petrol for one day won’t make any difference. Even if everybody does not purchase petrol today, we still have petrol in our cars. If we have petrol in our cars, eventually, we will burn the petrol, thus using the energy. That means, we are using petrol after all. And eventually, we need to refuel again.

    Also, as I have stated in the article, boycotting petrol means the need to boycott other things as well, such as food, electricity, and etc.

    Really, when it comes to petrol, boycotting is never a viable option.

  10. Tabuxander, nadlique is right- petrol boycotts is a non-starter. OK, you refuse to use petrol for a day and refuel the next? You are not helping your cause at all. The Malaysian public needs ‘shock treatment’. Now! I have said privately that our public in Malaysia are whimps when it comes to price rise! I wonder if they have ever taken Commerce or Economic while in school or college? The govt cannot continue subsidizing the rakyat. Even the BA state govts will realise this fact later. It drains the state/nation’s coffers for other infrastructure plans. We need to improve the railways, roads, buses, taxis in our cities and hubs. We have to ‘force’ the average Joe to take the bus to work, the caveat being that the transport system is improved. Once done, tax the idiots who still insist on using the car to work. Create drive zones, ask the toll & parking operators to standardise their charges to deter the makcik/kakak/bobjan/whatevr ‘boh’ to simply park their bikes/cars for hours at complexes. get the COE to work in our country especially those in states like S’gor and Penang. Insyaallah, being pragmatic people when it comes to paying fares (M’sians don’t care about paying a lot for entertainment and makan2 but protest when there is a 50sen bus fare rise!) Malaysians will take the bus!

    Countless other ways to tax these car-lovers to the ground. Like permitting only those with say, a min. income of RM600000/year to buys cars. No more favours from banks for low-income earners to buy cheap cars. In so saying, any new public transport system must work well! (I see many will smile and say, yeah…but when?) But we got to start somewhere. Others may have other ideas – so please do share. Wassalam.

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