10 July 2008

China, India, and Malaysia

Wikipedia keeps a list of oil prices around the world. The list is regularly updated.

OPEC chief, Chakib Khelil, was quoted in The Age (Australia) blaming the weak US dollar for the skyrocketing price of oil. He said the price increase was not linked to demand and supply. In the same interview, he also said that strong demand from China and India (for petrol) will foreseeably keep the price of petrol high.

I read that article and wondered what China and India did to require so much petrol. Here is a quote, incidentally also taken from The Age (Australia):
Until recently, several billion Chinese lived as we did a century ago. Imagine their energy demands rising to our levels and you'll quickly figure oil prices aren't going to return to the levels of a year ago.

Taken from this particular editorial, "The Year Everything Changed", the writer noted how the present oil crisis is different from the petrodollars oil crisis of the 1970's: First, oil crisis in the 1970's was artificial, because oil supply was artificially limited; second, it gets harder and harder to mine petrol because the mining sites are getting further and further outshore, in ever deeper waters, making it uneconomical to mine; and third, demand for petrol will continue to grow whereas there is only a finite amount of supply.

The writer certainly had a point. Again, I can do no better than to quote his words:
The real change being wrought on us is in energy. And it is energy - or rather the cost of energy - that will determine our future.

Imagine all the undernourished, poor and impoverished nations of this world, slowly inching their way toward economic emancipation. We are talking about billions of people, not including China and India. Imagine them striving to the lifestyle of the average Australian / American / Canadian: Fast cars, electricity available all hours of the day, et cetera. Surely, you can imagine these people would bump up the amount of energy demanded by, and consumed by, the world.

Malaysia is one such nation. By most calculations, we are a Third World nation. We have certainly not yet arrived at First World status. Our Malaysian government seems to be making a genuine effort to impress upon the rakyat the rising price of petrol. To what end? After all, our nation is a producer of petroleum. We produce more petrol than Singapore. How do we match against Singapore's strategic oil reserves of  "31.8 million barrels of crude oil and 64.5 million barrels of oil products"? Better still, has there been any effort channeled toward implementing carbon trading in Malaysia? A carbon trading market has been established in Melbourne. Whereas The Star (Malaysia) reports, the Malaysia Energy Centre estimates that Malaysia has up to 100 million tonnes of carbon credit.

Perhaps, with that last piece of information, it would not be fair to put Malaysia in the same basket as China and India.

The latest Oil Market Report, care of the International Energy Agency (IEA), expects global oil demand to grow by 1.1% in 2008. The IEA also records Malaysia (in 2005) as: producing 34,908 thousand tonnes of crude oil, importing 7,885 thousand tonnes of crude oil, and exporting 19,354 thousand tonnes of crude oil. With figures like that, I don't understand the Government's claims of "subsidy", when in actual fact we are consuming a portion of what we produce. Put another way, who did they say they are paying the subsidy to?

If you are interested in reading the IEA's Medium-Term Oil Market Report for 2006 and 2007, they are available as free downloads. Click on the following:
  • 2006 Medium-Term Oil Market Report - link
  • 2007 Medium-Term Oil Market Report - link


Shah Jehan said...

Makes sense. Since petrol industry is so profitable, why would any country, Malaysia included, want to miss the opportunity to rake billions? Being petrol producer, it means Malaysia, or Petronas to be exact, can gain so much by exporting the petrol. None is spared for our home country it seems. Its time that scientists, researches and the powers that be think about using alternatives to petrol. So that our lives will not be so impacted by the current hike.