Fuel price coming down...is it true or another hearsay???

There is this rumour just starting to circulate around town today. It's been said that the per-barrel world oil price is coming down hence lower retail fuel here in Malaysia...now lets take a moment here and ponder about it...then to laugh at such a thought...HAHAHA!!!

Dearest Rakyat, open your eyes, think and shut your ears to all those senseless crap!!! After all that's been going on in our country I can't believe there are still some Rakyat waiting and hoping for such a thing. The only time the fuel price is gonna drop and make a difference in our lives is when an alternative power source that is in abundance, consistent and safe is found.

Malaysia now under DSAAB has become not a country but an enterprise for him and his selected posse to satisfy their greed and lust for financial and material wealth. Lets think of the fuel price now in an enterprise point of view, we have shown our dissatisfactions towards the hike but what to do, no matter what we still need to pump petrol as we need our ride to scavenge for bread to put on our family's dinner table.

Thing is, the government knows this fact too. At RM2.69 per-litre (for petrol) actually there is still some subsidy given by the government (God bless their soul...BLUEKK!!!). If at zero subsidy the price per-litre should hit around RM3.50 plus minus and if it's true that the world fuel price is coming down, why should the government lower the present retail price as their initial aim is zero subsidy. Isn't that the norm you say that since world price is down then Malaysia's fuel should go down too. Well actually 'YES' but what is the norm in Malaysia nowadays??? Hell, we're got a DPM and an ex-DPM that loves anal, you tell me la apa itu NORM!!!

In order for our present retail fuel price to drop with consideration of our government policy of zero fuel subsidy that means the world oil price gonna have to drop to well below USD100 per-barrel for us to experience any significant change. Now, is that going to happen or even if it is, anytime soon??? So till that God given day comes, the world oil price may trickle down a bit but there will still be no cause for our government to lower the existing price. Even more better for DSAAB and posse as now they have even more available funds that has been relieved to channel to some other dodgy projects (for example, next year's Moonsoon Cup or maybe buy back M.V. Augusta for another few milion EURO than sell it again for EURO 1).

Then with all that huha about the fuel price coming down it leads to the rumour of the bank interest rate coming down. OMGawd guys, bank interest is going up is the government counter measure to curb the rising inflation rate of Malaysia and its got nothing to do with the oil price. Simplly put, inflation is caused by too much money, high demand for goods and services against the lack of supply which in turn raises the price of goods and services. So regardless of the increase or decrease in oil prices, until inflation can be brought down to a healthy level, interest rates will continue to escalate. Need more indepth explanation then please read article below ;

Malaysia raises rates to suppress inflation
Economic growth holds steady at 5.2%
By Stephanie Phang
Published: WEDNESDAY, FEBRUARY 22, 2006

KUALA LUMPUR: Malaysia raised its benchmark interest rate a second time in three months on Wednesday to quell inflation, after economic growth in the fourth quarter held near the level achieved in the previous three months.

Bank Negara Malaysia raised its overnight policy rate to 3.25 percent from 3 percent.
The rate increase was the second since November, when the central bank raised borrowing costs for the first time since the 1997-8 financial crisis.

It signals that the central bank governor, Zeti Akhtar Aziz, is focusing on curbing inflation amid steady economic growth, as concern eases that higher interest rates will hurt spending.
The Malaysian economy grew 5.2 percent in the fourth quarter, the central bank said in a separate statement. The economy expanded 5.3 percent last year, compared with a 7.1 percent increase in 2004.

The central bank wants "to keep inflation at bay," said Lee Heng Guie, an economist at CIMB Securities in Kuala Lumpur, who had expected the policy rate to rise by a quarter-point to 3.25 percent this month.
"Inflation risk remains an ongoing concern, with potential increases in administered prices such as power tariff and petrol prices," and "there is still pressure on the widening yield gap with the U.S.," Lee said.

Malaysia's inflation rate was 3.2 percent in January, the Statistics Department said in a separate report.

The January rate was calculated using 2005 as the base year for the first time. Revised historical data was not available.

Consumer prices rose 0.3 percent in January from December.

The inflation rate in December, calculated using 2000 as the base year, was 3.5 percent, holding near the highest rate in more than six years for a second straight month.
The inflation rate more than doubled to 3 percent in 2005, the highest since 1998, from 1.4 percent the previous year, as the government raised retail fuel prices and taxes on tobacco and alcohol to reduce the budget deficit.

Malaysia's three-month interbank rate of 3.28 percent is 1.5 percentage points lower than the comparable rate in the United States, according to Bloomberg data.

The gap widened from 1.16 points on Sept. 30, spurring capital outflow that contributed to a 12 percent drop in Malaysia's foreign exchange reserves to $70.5 billion in the fourth quarter.
In the United States, the Federal Reserve has raised its benchmark interest rate 14 times since June 2004 to control inflation. Until November, Bank Negara's overnight policy rate had been unchanged at 2.7 percent since it was introduced in April 2004 as a benchmark by which the country's banks set lending rates.

"The recent comments by" the chairman of the Federal Reserve, Ben Bernanke, "seem to suggest that further U.S. rate hikes are on the cards," saidLee at CIMB, who expects Malaysia to raise rates by as much as 100 basis points this year.

"However, the pace of Malaysia's monetary tightening could be slower than expected if the U.S. interest rate cycle reverses and if the ringgit strengthens by 3 to 5 percent."
The ringgit may rise 3.3 percent against the dollar by the end of the year as Malaysia's central bank increases interest rates to curb inflation, Standard Chartered Bank and ABN AMRO said this month.

The ringgit has risen more than 2 percent since a seven-year peg to the dollar was scrapped on July 21, according to Bloomberg data. The dollar rose 0.04 percent to 3.7195 ringgit on Wednesday.

Faster economic growth means the central bank will not have to keep rates at the current low levels to spur domestic spending.The inflation outlook will be the "main determining factor" for the central bank's interest rate policy, while monetary policy this year "will be supportive of growth" because "our interest rates are still at low levels," Governor Zeti said on Feb. 17. - International Herald Times

So if attention was put to this passage of words 'government raises retail fuel prices and taxes on tobacco and alcohol to reduce the budget deficit', you'd probably notice that its the attempt to reduce the nation's budget deficit that prompts the fuel hike caused by the fuel subsidies.

I don't know if I'm right but I do believe I am some where along that line of understanding that:-
Fuel subsidy + dodgy projects = Budget deficit
Budget deficit + inflation = Increase in interest rates

So where did people get the idea that lower world oil per-barrel price = Lower per-litre retail fuel price and lower inflation rate hence lower bank interest rates......