Fuel prices hike doesn't cause lower fuel usage

Tantri Yuliandini and Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

The rising price of gas has not stopped families like the Sutanto's from maintaining their two-car, 200-liter-a-week lifestyle. On the contrary they're quite happy to dish out more than Rp 450,000 (about US$48) a month on fuel.

"Because we need them (the cars), and to take the children to school. The price of fuel is just something we have to put up with," Sutanto, 39, said.

Little does he, and others like him, realize that in just a few short years he will have to dig much deeper into his wallet to preserve the privileged lifestyle he now enjoys.

Analysts have repeatedly warned that the world's oil reserves are depleting at an alarming rate. Hunter Herron of the Petroleum Equities Inc., said that 90 percent of the oil produced today comes from fields more than 20 years old.

At the same time, despite advances in technology, discovery rates for new oil reserves are falling. "For every four barrels used today, only one new barrel is found," Herron said.

Separately, the Ministry of Energy and Mineral Resources reported that about 75 percent of Indonesia's energy still comes from oil, with domestic consumption rising at an average of 6 percent annually. Meanwhile, production has been steadily declining by an average of 2.8 percent per year since 1996.

The result of the rising demand and falling production is increasing imports, which the government will have to pay for.

Between 1996 and 2000 alone, imports increased by a staggering 71 percent. In 2000, fuel product imports grew to 90 million barrels at a cost of US$3 billion, up sharply from the 79.9 million barrels the previous year.

"People should remember that oil reserves are finite and we could turn out to be a net oil importer if we don't start to conserve," Director General of Land Transportation Iskandar Abdullah said over the weekend.

Any sense of crisis is clearly absent today as Indonesians have been lulled into a false sense of security for too long by cheap, subsidized fuel.

Recent efforts to reduce subsidies by increasing fuel prices and gradually bringing them up to international market levels are based on the argument that subsidized fuel largely benefits the middle and upper income groups.

Something that is the exact opposite of the original aim of the subsidies, which was to ease the burden on the poor.

Iskandar acknowledged that significant price hikes should be a major factor in promoting public awareness of fuel conservation and encouraging people to look for alternative energy sources.

"The ongoing fuel price increases should provide an opportunity for the government to promote energy conservation and for people to change their lifestyles," Iskandar said.

So far, government campaigns on the effective use of energy have merely been intended to counter widespread public rejection of fuel and electricity hikes rather than to promote conservation.

And the government's fuel conservation strategy has mostly been aimed at getting people to look for alternative sources of energy instead of reducing consumption.

Providing alternative fuel sources would be one way of encouraging conservation provided the government was wholehearted about doing so.

The introduction of car-gas (compressed natural gas) as an environmentally friendly alternative to gasoline in the 1990s barely got off the ground because of a lack of such commitment.

One problem is state-owned fuel monopoly Pertamina's refusal to set up more car-gas stations other than the 17 stations currently in operation around Jakarta.

"Since they were first opened (the car-gas stations), only 38 percent of them have been effectively used as not many people like to use car-gas. That is why Pertamina has refused to set up more car-gas stations around the capital," Iskandar said.

On the other hand, a former car-gas user, Bartha, said that he had decided to give up on car-gas as there were simply not enough car-gas stations around.

"For one thing, it's hard enough to find car-gas stations in Jakarta. It's well-nigh impossible to find them outside of Jakarta," he said.

Besides being environmentally friendly, car-gas is also much cheaper, selling at Rp 450 per liter compared to Rp 1,750 per liter for premium gasoline.

Just as Singapore has found a way to raise conservation awareness by declaring a car-free day on Earth Day every April 22, the Indonesian government should also develop its own measures to raise such awareness.

As long as it fails to do so, people like Sutanto will continue their extravagant lifestyles, disregarding the fact that fossil fuels will eventually run out.

"Maybe one day we'll think about other alternatives than gasoline, but for now I still don't see any urgency."

Indonesia's Oil Reserves 1991-2000

(billion barrels)

----------------------------------------------------------------- YEAR 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 ------------------------------------------------------------------ TOTAL 11 11.3 10.4 9.5 9.1 9 9.1 9.7 9.8 9.6 -------------------------------------------------------------------

* Data published by Pertamina