11 December 2015

Government Should Encourage Citizens To Drive New Cars

By and large, Malaysia is a prosperous country. But the same may not be true of its 28 million (and counting) citizens. Many of the citizens are not well to do and cannot afford to change cars on a whim and fancy. However, it is clear that driving new cars helps to lower carbon emissions, and newer cars are also known to be more fuel efficient. So why isn't the government of Malaysia helping its citizens to drive new cars?

There are, indeed, several ways to help citizens drive new cars. One of these is to lower the import duty for foreign vehicles. (Of course, that might cause a run-in with Proton, which is a local car manufacturer, but it would benefit Proton to be more competitive.) Some of these foreign-made cars can be more fuel efficient (hybrid and electric cars?) than the locally produced cars. Another is to encourage trade-ins through government incentives. ("Trade in your car today! Get a 20% matching grant from the MOT....") And a third is for local producers to manufacture cars with government subsidy, therefore allowing them to sell to Malaysians at rock-bottom prices.

There are drawbacks to driving older vehicles. But many of us drive them anyway, because we tell ourselves that we look cool like Warren Buffett (or, for some Malaysians, the late and great Nik Aziz). One of these drawbacks is the part failure that owners face. This part or that part will wear out and break down, causing untold grief in suddenly necessitated expenses. Another drawback is petrol consumption. Your older, sexier beast of a vehicle will roar on the road. And it will guzzle that gallon of oil whenever you fill her up. Yet a third drawback is the cost of retrofitting the car with modern gadgetry. If you want air-conditioning, remote locking, keyless ignitions, and such, all in your old junk on wheels, be prepared to spend money. If you decide to save on money, you're due for a hot, sweaty drive on the streets of Kuala Lumpur. (It's rainy season now, so read this article again in 6 months time and see if you agree.)

If the government does not agree that citizens should drive new cars, it may be of the opinion that less cars on the road is better for the environment. The government cannot ban cars. But it may consider reducing the number of cars on the road. Workers power the economy, and workers need to get to work. Thus, workers need to commute. Commuting, unfortunately, requires a car, unless there is good public transportation at the place you want to go to.

In an article from Catchnews (1) it was stated that in India, the Delhi government has decided to reduce cars on the road by banning cars with odd and even numbers on alternate days. This would theoretically halve the number of vehicles on the road if everybody owned only one car.

However, another article from Catchnews (2) stated that a similar effort was carried out in Mexico City between 1984 to 1993. The carbon emissions actually increased because many car owners purchased a second, older car so that they could drive their second car when they could not drive their first.

I hope that the government of Malaysia will pay heed and give incentives to Malaysians to trade in their cars. Local car makers will have a field day and their sales figures will go up. Government makes more tax from local car makers. Malaysians get to buy new cars at more affordable prices and get rid of their old piece of junk. Everybody wins. Everybody is happy. And elections are coming soon.

References
  1. Delhi Pollution: Odd and even number vehicles to be on roads on alternate days from January 2016, by SPEED NEWS DESK. Published 4th December 2015. URL: http://www.catchnews.com/social-sector/delhi-pollution-odd-and-even-number-vehicles-to-be-on-roads-on-alternate-days-from-january-2016-1449225421.html
  2. What Bogota, Mexico City, Beijing's experiences tell us about Delhi's even-odd policy, by Nihar Gokhale. Published 7th December 2015. URL: http://www.catchnews.com/environment-news/what-bogota-mexico-city-beijing-s-experiences-tell-us-about-delhi-s-even-odd-policy-1449428409.html

Metro-style Railways for Other Major Cities in Malaysia?

As the title of this post suggests, we require Metro-style railway systems in other major cities of the country. In many major cities outside Kuala Lumpur, many places are not reachable directly through public railway. We have to emulate the Metro subway in the major cities of the world - which link every nook and cranny of the city.

Therefore, it is important that the Transport Ministry and the Public Works ministry of this country to make a real effort to create railway systems in other cities (other than Kuala Lumpur) which link all corners of those cities.

KL Sentral may serve as a model for future development. However, KL Sentral only links the KTM, the Rapid railway, and the high-speed railway to the airport. It would be more effective for commuters if there were more links between cities through alternate railway lines.

In any case, the railway system which links major parts of the nation's capital means that Kuala Lumpur is well placed to cater to the needs of those who commute to work. The same may not be true of other major cities in Malaysia. We are yet to see similar systems being put in place in cities such as Georgetown, Johor Bahru, Kuching, and Kota Kinabalu.

This means that those workers who commute to work in those cities have no choice but to consider either driving, carpooling, and buses. All of these modes of transportation require petrol. If those cities had railway systems, the population in the cities can save some money on petrol.

We all know that times are hard and everybody needs to save a little bit more. Putting up intra-city railway systems for easy commuting will help people from other major cities. At the same time, those cities become more livable and their economies will improve. This may lead to more growth in those cities. There's a good reason why Kuala Lumpur is the preferred place for young people to work, especially those who may not have their own vehicles yet.

Note: An article from India says that a Metro-style railway requires at least 800,000 passengers per day just to break even. The said article further suggests that, in India, the rush to lay down Metro-style railway tracks may be causing untold losses to authorities. Link to article: http://www.catchnews.com/india-news/small-cities-are-queuing-up-for-metro-rail-how-many-can-really-afford-it-1449520701.html (Details: Small city alert: The metro story no one is talking about, by Skand Vivek Dhar. Published 8th December 2015 on CatchNews.)

19 November 2015

The Story of Oil - a video from CME Group

On CIMB's website, there is a link to an educational website known as "Futures Fundamentals", run by CME Group. While I may not know much about the group, I found that this video, "The Story of Oil", is quite good. It comes from an article, "Gas Prices Explained."



Aside from this nice video about oil, there's also a cool infographic about how oil prices are affected. It deals with the different stages of oil production, namely:

  1. Extraction
  2. Transportation
  3. Exchange
  4. Refinement
  5. Gas Station

These are quite new to me, but no doubt, they are nothing new to those in the oil and gas industry. Maybe some of you kind souls out there can point me in the right direction so that I can understand more about each stage. Oil is such an important thing, many of our industries rely on it: logistics, industry, energy, plastics, etc.

I found it interesting that the website, "Futures Fundamentals", has many articles on futures. While I don't trade in futures, the concept of futures is also one that is quite intriguing. Buying something tomorrow, at today's prices: that's the basic concept. One of the other articles on "Futures Fundamentals" on "Why futures matter to you", says:
"Airlines can more accurately predict their fuel costs. So you can find better prices and options when you’re looking for a flight." 

I suppose, that's how airlines are able to offer you prices for flights half a year in the future, when they cannot possibly know what the price of oil will be half a year down the road.

Now, just as much as I'm not an expert on oil, I'm also not an expert on futures. But here's what one article from Marketwatch.com, "What do futures really tell us?" says.

"Futures essentially give investors a preview of what’s likely to happen when the U.S. stock markets open ...  The price of a stock-index future is generally very close to the price of the actual index, and because these futures start trading before the stock market opens, they give an early indication of what should happen when it does..."
Another interesting article in The Telegraph from 2008 explains what oil futures are, and how they are traded. Among the salient points of the article:

  • Futures contracts take place in an exchange.
  • You need to be a member of an exchange to trade futures.
  • Members can also trade for hedgers or speculators.
  • Trading houses regulate the exchanges and protect both parties as a "middleman"
  • Trading houses establish the rules of the trade, including margin levels, default rules, settling individual positions.
  • Participants in trading houses initially pay only a fraction of the amount being traded.
  • At the end of the day, the costs of the trade are charged to the participants, taking into consideration any profit made or losses sustained since the time of the trade.
  • On the settlement date, or the expiry of the futures contract, the oil is either physically delivered to the buyer, or there is a cash settlement.
  • However, physical delivery of commodity futures is rare. 
  • Market participants can also settle their obligations before the expiry date.

I don't understand everything that I read, but it sounds like there is a lot of money going on there, and a commodities futures trader could be making a lot of money. It is a potentially more lucrative business than mining for oil (which could cause losses if the oil wells dug up do not have oil). It might be worth learning up.

Links: 


  • http://futuresfundamentals.cmegroup.com/impact-gas-prices-explained.html
  • http://futuresfundamentals.cmegroup.com/basics-why-do-futures-matter.html
  • http://blogs.marketwatch.com/realtimeadvice/2011/08/11/what-do-futures-really-tell-us/
  • http://www.telegraph.co.uk/finance/newsbysector/energy/2790647/Oil-price-QandA-What-are-oil-futures-and-how-are-they-traded.html

24 April 2015

Activist: Fracking Only Creates Hotel Maid & Prostitution Jobs for Women

In New York, Sandra Steingraber, who is with New Yorkers Against Fracking, claimed that the state's ban against fracking is not a loss for women. She claimed that 95% of the jobs created in the fracking industry are for men, while the leftover 5% of jobs for women are only for hotel maid and prostitution.

"Fracking" is the popular name for hydraulic fracturing, a process through which natural gas is extracted by pumping high-pressure water into layers of stone, which breaks up the stone and releases the natural gas.

In December 2014, the Governor of New York, Andrew Cuomo, announced his decision to ban fracking in the state after considering representations from environmental experts. "I cannot support high-volume hydraulic fracturing in the great state of New York", he said. "I think it’s our responsibility to develop an alternative … for safe, clean economic development." In actual fact, there had been a moratorium on fracking in New York since 2008 for authorities to study its impact on the environment.

In February 2015, fifteen towns in New York threatened to secede from that state to join its neighbour, Pennsylvania, where fracking is allowed. A spokesperson for the group, Mr. Finch, said: "There are no jobs. The economy is terrible. There's nothing going on." The towns reside on the Marcellus Shale, which is rich in natural gas.

From the ShaleTEC website (Shale Training and Education Center):
What Is Shale Gas and Why Is It Important?
Shale gas refers to natural gas that is trapped within shale formations. Shales are fine-grained sedimentary rocks that can be rich resources of petroleum and natural gas. Sedimentary rocks are rocks formed by the accumulation of sediments at the Earth's surface and within bodies of water. Common sedimentary rocks include sandstone, limestone, and shale.
Over the past decade, the combination of horizontal drilling and hydraulic fracturing has allowed access to large volumes of shale gas that were previously uneconomical to produce. The production of natural gas from shale formations has rejuvenated the natural gas industry in the United States. 
The US Government's Energy Information Administration noted that natural gas is a clean burning fuel, generating less CO2 emissions than coal and other petroleum products. However, natural gas, made up mostly of methane, is also a greenhouse gas. This means that natural gas must be flared up at most drilling sites.

From the EIA's website:
Fracking involves pumping liquids under high pressure into a well to fracture the rock which allows natural gas to escape from the rock. There are some potential environmental concerns associated with the production of natural gas using this technique:
The fracturing of wells requires large amounts of water. In some areas of the country, significant use of water for shale gas production may affect the availability of water for other uses, and can affect aquatic habitats.
If mismanaged, hydraulic fracturing fluid—which may contain potentially hazardous chemicals—can be released by spills, leaks, faulty well construction, or other exposure pathways. Any such releases can contaminate surrounding areas.
Hydraulic fracturing also produces large amounts of wastewater, which may contain dissolved chemicals and other contaminants that require treatment before disposal or reuse. Because of the quantities of water used and the complexities inherent in treating some of the wastewater components, treatment and disposal are important.
According to the United States Geological Survey, hydraulic fracturing "causes small earthquakes, but they are almost always too small to be a safety concern. In addition to natural gas, fracking fluids and formation waters are returned to the surface. These wastewaters are frequently disposed of by injection into deep wells. The injection of wastewater into the subsurface can cause earthquakes that are large enough to be felt and may cause damage."
Natural gas may be released to the atmosphere during and after well drilling, the amounts of which are being investigated.
Hydraulic Fracturing - Its Growth and Risks. Prepared by Reuters.
Source: http://sitesmedia.s3.amazonaws.com/boussonadvisorygroup/files/2012/11/Fracking2.jpg


References

  1. Richardson, V. (2015) "Fracking boom creates jobs for women — but only as prostitutes and maids, activist claims". Washington Times, 20.04.2015. URL: http://www.washingtontimes.com/news/2015/apr/20/fracking-creates-jobs-women-prostitutes-maids-only/?page=all
  2. Gerken, J. (2014) "Gov. Andrew Cuomo To Ban Fracking In New York State". Huffington Post, 17.12.2014. URL: http://www.huffingtonpost.com/2014/12/17/cuomo-fracking-new-york-state_n_6341292.html
  3. Mathias, C. (2015) "New York Towns Threaten Secession Over Gov. Cuomo's Ban On Fracking". Huffington Post, 20.02.2015. URL: http://www.huffingtonpost.com/2015/02/20/new-york-fracking-secession-southern-tier-cuomo_n_6722296.html
  4. ShaleTEC website. "What Is Shale Gas and Why Is It Important?" Published by Pennsylvania College of Technology. URL: http://www.shaletec.org/whatis.htm
  5. EIA website. "Natural Gas Explained: Natural Gas and the Environment" Undated. URL: http://www.eia.gov/Energyexplained/?page=natural_gas_environment



18 March 2015

Kris Wiluan

Kris Wiluan, one of Indonesia's 40 richest people. Picture taken from Forbes.com
Kris Wiluan is a business magnate, and one of the top 40 richest people in Indonesia. He also happens to be a giant in the energy industry. His story may be seen as a series of lucky breaks, combined with his natural charm.

In the 1960s, his parents sent him to Germany to study, but he turned up in England by mistake. His uncles convinced his parents that English was more practical, and so they allowed him to study in England. While studying in university there, he met his British wife.

After graduating he became a programmer for Guest, Keen and Nettlefold, now GKN. Later, in 1976, he was offered to work for United Motor Works. A year later he began his own business. He began his business modestly, catering food and supplies to oil rigs, including videos and other entertainment.

In an interview with the Telegraph, he describes his big break: One day, while transporting equipment for Dupont from Singapore to Batam, they missed the returning ferry. While chatting in the darkness, he was suddenly inspired to promote Batam as an alternative storage location.

He got his first contract from Dupont for storing 40,000 pipes on Batam island. With his charm, and sheer good luck, he managed to pull together the necessary resources without putting down any capital. Later, he moved into machining blank pipes for Mobil and other oil companies.

His business empire today includes PT Citra Tubindo, which manufactures pipes and other oil-related equipment, and KS Energy, a Singapore-listed equipment distribution and drilling company.

In 2007, Forbes listed Kris Wiluan's net worth at USD 185 million. He was No. 35 in the Forbes 2007 list of Indonesia's 40 richest people. A mere 2 years later, he was listed by Forbes as having a net worth of USD 240 million. This time, however, he was No. 40 in the Forbes list.

References:

  1. http://www.telegraph.co.uk/finance/businessclub/business-club-video/global-business-insight-video/7849925/Kris-Taenar-Wiluan-interview.html
  2. http://www.forbes.com/lists/2007/80/07indonesia_Kris-Wiluan_KIAQ.html
  3. http://www.forbes.com/lists/2009/80/indonesia-billionaires-09_Kris-Wiluan_KIAQ.html
  4. http://batampos.co.id/26-08-2013/pahit-manis-karir-bisnis-kris-wiluan-1/ (Indonesian)