Energy is the major component of our living costs. Everything that we do, touch, and eat – are linked to energy. It is the source of the modern day life. We need energy to light up our house, buildings, streets, etc; we need energy to cook and prepare our food; we need energy to produce our them; we use energy to move around whether by automobile or public transport; and so on.

In fact energy is almost everything. Even the water that we use to bath and cleanse ourself, uses energy; every thing that we use such as clothings, chairs, tables, etc., requires energy to be produced. It is estimated that almost 40% to 50% of our disposal income is spent on energy. The only thing that we may not realize is that whether it is spent directly, such as buying gasoline and paying electric bills, or indirectly – when we use water, eat our food, etc.

That’s the reason why when the price of the major source of energy, which is oil or fuel, increase, everything else also went up. And for that reason, when the government increase the fuel price (i.e. reduces the subsidy), the impact on the costs of living is tremendous. The impact is even more severe on low income segment of the population, where the percentage of their spending on “energy” can be as high as 70%, in relative terms.

The impact of energy price increase on the economy is direct – when people have less percentage of their income left to be spent, they will purchase less of the “non-essentials” or they will even spend less on “essential” items, due to less money available in the hand. In another word, total consumption in the economy will be reduced, and similarly there will be less cash available for savings, and savings figures will also dropped. Both of these elements of reduced consumption and savings will have long term impact on the country’s economic growth. And on the same token, higher prices means higher inflation, which means people’s future purchasing power is also reduced.

We can go on and on relating the economic impact of energy prices, as per standard economic text book forecasts of cause and effects. Nothing of this should be new to anyone.

I have the privilege of watching our local Television and News for the last few weeks; and what abhors me is the aloof nature of our media and leadership. There is nothing wrong to admit that the prices of oil and fuel are beyond our control, and are being determined internationally.And also there is nothing wrong to admit that fuel prices is a major concern of the government and the subsidy involves are huge, and causing a drain on the national budget. People are intelligent enough to understand all of these. What is more important that we (the people) need to know is what are the plans that the Government has. Is there any real efforts or strategies that government plan to undertakes to tackle the problem? Or do we have none? All that the government says – is that it will review the price and subsidy if the oil price went up to US110 or US120 per barrel. We all know that the possibility of such prices is not that far from happening. And what if the prices even when beyond US120 per barrel; what will the government do?

Let us stop from the charades of politics – the government is saying that they are doing the fuel subsidy as favor for the people, while the opposition is saying the government is not doing enough. The truth is – whether anybody from both divides can tell exactly what they plan to do. Or is it just simply throwing the balls to each other. While you are holding it, I blame you, and if I hold it, I find blame on you as well. That is what seems to be the case.

What is needed are far from rhetoric. Energy crisis is something that are serious and all encompassing in nature. Whoever is in position of responsibility must work actual strategy and plans. Unless we have a real concerted effort on this matter, the question of increase in energy prices (i.e. fuel prices) will for sure happen. It is just a question of by how much and how soon. People will have to suffer.


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  1. dr. ahmad sallehuddin yaacob

    salam dr wan, your article is absolutely right, conditions are getting worse, people especially in the lower income group have suffered much and some of their basic necessity are not met, in kota bharu for example, there are lot of school going age children are not going to school even at the primary level. Most of the resources have been spent on food and other very basic necessities. my question is do you have any idea on how to stop all these miseries because as you are aware that most kelantanese are malays and therefore they are muslim, kind regards


      Dear Dr. Ahmad

      I do not have the statistics to back up my claims. However there are studies conducted for the countries in Africa and other impoverished nations to back up such claims.

      For the case of Malaysia, I do not have any clue on exactly the impact of energy on household incomes (disposable and net savings). The GNP data and others provide little clue since it is on the aggregate; and I am not sure how much is the skewness of income distribution of the population. In any case, if we can put the two things together, we might have some clue.

      Thanks for your comments.

      Wan Hasni

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