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Don't expect pump prices to be constantly reduced: Najib

By Sunday November 23rd, 2008 No Comments

LIMA (Peru): The people should not expect the pump prices to be constantly reduced just because crude oil prices had now fallen below US$50 per barrel, Deputy Prime Minister Datuk Seri Najib Tun Razak said.

He said the Government would stick to its planned review of pump prices every two weeks as this offered some sort of stability.

“If we keep cutting the pump prices whenever crude oil prices fall then we will have to also increase the pump prices every time there is an increase at the international market.

“We cannot afford this kind of volatility. The people may not be able to cope with these sudden changes.

“Oil prices cannot stay so low for long. Sooner or later it will increase. If we cut the prices too much, we will have to increase it even more and this will affect the people,” said Najib to Malaysian newsmen after attending Friday prayers at the Islamic centre here.

Asked if the Government would allow the pump prices to float and be determined by the open market, Najib, who is the Finance Minister, said most petrol pump dealers would find it difficult to cope with such daily or weekly fluctuation of prices.

On crude prices being below US$50 per barrel, he said this meant that the Government was providing almost “no more fuel subsidies” and this meant “quite a substantial amount of savings”.

He said further cuts on pump prices would also act as a dis-incentive for Malaysia to seek an alternative source of energy.

“If oil is too cheap we will not work very hard to seek alternative sources of fuel,” he added.

He also acknowledged that the falling oil prices would affect Petronas which would in turn affect the Government’s coffers but stressed that the Government could still maintain its revenue for this and next year.

On the Apec Summit, which starts Saturday, Najib said the global financial crisis looks set to dominate the two days of talks involving over 50 leaders of the member economies.

Najib is also to attend the Apec Business Council luncheon together with other leaders and the private sector has invited him to speak about Malaysia’s experience from the 1997 Asian financial crisis.

Asked to compare the two crises, Najib said the present one was worse because it affected more countries, especially the big consumer countries like the United States and European nations.

He said the fiscal measures taken by the affected countries did not seem to have taken off as quickly as they should.

“Except for China’s US$700bil stimulus package, the other country’s efforts are taking too long to take effect,” Najib added.

He said the US bailout package of US$700bil was also taking too long and had failed to stimulate inter-bank borrowing thus reducing lending growth in that country.

Source : The Star

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