Late October 2008 Report

Worldwide, stock markets are experiencing downward trends. The current situation may be described as a meltdown. The following headlines could be seen in the Business section of today's The Star newspaper: Central Bank Intervention Fails To Prop Up Aussie Dollar (link), Malaysia, Singapore Stocks Hammered (link), KLCI Tumbles 53pts in Early Trade (link), and Oil Prices Fall As Investors Eye Weak Demand (link). The Malaysian Insider reported that signs of recession were becoming apparent globally. 

The US dollar is appreciating against other currencies -- perhaps with the exception of the Japanese Yen. The price of petrol, frequently traded in USD, is subsequently also dropping. At last count, the price of petrol (Brent crude) stood at USD63 per barrel. Crude oil was traded in Houston at a low of USD61.30. In Malaysia crude oil futures were traded at USD62.39.

Subsequently, many quarters have started calling for the reduction of the price of everyday goods. CASSA, the Consumer Association of Subang and Shah Alam, is calling for the electricity tariffs to be lowered. (Source: Malaysiakini.com, Consumers Want Power Tariff Down, by R. Ghazali, 28.10.2008) This is in reaction to the falling price of petrol. A year ago, Malaysians were warned by Deputy Prime Minister Najib Razak that the price of things would go up. (Source: Malaysiakini.com, Brace For Gas, Electricity Price Hikes, 01.12.2007)

Meanwhile, the leadership of this great nation continue to be obsessed with internal party politics. In an effort to gain more nominations, a certain UMNO candidate is suggesting that the party's loyalists be allowed to control the government. (Source: Malaysiakini.com, Biarkan Parti Kuasai Semula Kerajaan, by MM Noor, 28.10.2008) This particular candidate is also stressing that the NEP (New Economic Policy) has failed to achieve the target 30% ownership by a certain ethnic group. In troubled times like these, is it really the right thing to do -- play the racial card, in order to gain personal mileage? While he is not blatantly blaming the economic woes on other ethnic groups, yet the pressing of racial "hot buttons", for political mileage, is not the answer. (Perhaps it is because he needs a few more nominations?) Instead, he and other members of UMNO should realise that every single Malaysian is suffering from the present economic downturn. (Source: Malaysiakini.com, Hidup Melayu! by N. Tan and N Nazmi N Ahmad, 9.9.2008)

It is time to stop the politicking, and get to resuscitating the economy. Let us start to hope. Let us take the first step by realising that politicians are at this point of time, trying to get votes from their own party members. If we succumb to their talk, we would sacrifice the opportunity to bring us to a stabler economy. Instead, we should quietly reflect -- on the sombre prospects that await, and what can be done together, to enjoy a better future together.

Malaysian Tapis Oil

In a report Petrol Price To Ride Out Oil Spike (24th Sept. 2008, Sydney Morning Herald), the following words can be found: "The regional benchmark, Malaysian Tapis oil, rose 12 per cent to $US102.12." To understand more about Malaysian Tapis Oil, I recommend reading the following article: Malaysian Tapis Blend 44.

Among the points of interest in that article are:

• Malaysian crude oil contains very little impurities, esp. sulphur;
• Petronas sells Malaysian Tapis Oil overseas and purchases cheaper crude oils, to sell in Malaysia;
• World Crude Oil Prices can be found here (official statistics from US Government).

A press release from Esso Production Malaysia Inc., EPMI Begins Production From Tapis E Oil Platform, had the following information:

The Tapis oil field was discovered in 1969 and four platforms were installed from 1977 to 1981 to develop mainly the central and eastern areas of the field. Oil production began in April 1978. Tapis E, located in 200 feet of water, is the fifth platform in the field development program and develops the western and southern areas of the field.

More information is gleaned from a report by the Reserve Bank Of Australia dated August 2007: Recent Developments in Oil Prices :

Tapis is a Malaysian oilfield and is the lightest and sweetest of the main types of crude oil, with an API gravity of 45.5 degrees and sulphur content of 0.1 per cent. By comparison, WTI (West Texas Intermediate) has an API gravity of 39.6 degrees and sulphur content of 0.2 per cent, making it sweeter and lighter than Brent (Europe), which has an API gravity of 38.3 degrees and a sulphur content of 0.4 per cent.

Other points of interest in that article (by RBA) are:

• Oil prices worldwide are usually determined by benchmarks;
• The most commonly cited benchmark, WTI (West Texas Intermediate), represents less than 1% of global oil production;
• Pricing is based on sweetness (sulphur content) and lightness (API content);
  
• "Sweet and light" crude fetches higher prices compared to "heavy and sour" crude, because less production is required.
  

Petrol Prices Down Again

As of 00:00 hours on 14th October, 2008, petrol and diesel prices were further reduced. The new prices are:

• RON 97 @ RM2.30 per liter (reduction: 15 sen)
• RON 92 @ RM2.20 per liter (reduction: 10 sen)
• Diesel @ RM2.20 per liter (reduction: 20 sen)

Petrol prices per barrel are about USD$80 per barrel. (Ref: The Edge Daily, 15-10-08: Petrol Down Another 15 Sen, by YK Gan)

Penang Chief Minister, Lim Guan Eng, was quoted saying that petrol prices should be reviewed on a daily basis, rather than a monthly basis. He also called for the electricity tariffs to be reduced, given that petrol prices have gone down. (Ref: Ibid.)