National oil conspiracy

National oil conspiracy

The government's policy of keeping domestic fuel prices as
inexpensive as possible, all in the name of protecting the poor,
must count as the biggest national conspiracy ever concocted by
the country's ruling elite. The poor are the very last people to
benefit from the cheap fuel policy which has been sustained for
decades through a heavily subsidized system.

The real beneficiaries of the subsidies are the rich. The
richer you are -- represented by the number of cars you have, the
amount of air travel you make, and the bright lighting in your
mansions -- the more money you are actually extracting from the
system, all at the expense of the rest of the nation.

Industrialists also count among the biggest beneficiaries of
the cheap oil policy. As a powerful lobby group, they have always
been the most vocal in opposing increases in prices. They argue
that raising fuel prices would undercut export competitiveness,
and in turn would cost the nation jobs. Such an eloquent argument
is nothing but blackmail to ensure that cheap oil will continue
to flow to their factories and sustain their profit margins. They
care not that they are effectively exporting the subsidies --
good taxpayers money -- abroad.

Foreign buyers of Indonesian products inadvertently become the
beneficiaries of the cheap oil policy although they are not part
of this national conspiracy. Combined with the cheap Indonesian
labor employed to produce these goods, Indonesia has been running
a grand sale with products at virtually give-away prices.

The oil subsidy system has produced its share of profiteers
and manipulators who have been smuggling cheap Indonesian oil
products abroad, mostly to Singapore. That this operation has
been going on for years without any real effort by the government
to stop it further testifies to the collusion at the highest
levels. The racketeers as well as the final buyers of the
smuggled products, whoever they may be, are another group of
people to have benefited from the oil subsidy.

The cheap oil policy is probably the most devious scheme that
the country's rulers, along with their business friends, have
ever designed in their efforts to plunder the nation's wealth
while professing to act in the interests of the people. They are
not only deceiving the poor but they are also selling the nation
down the drain.

They are depriving the nation's children, grandchildren and
great grandchildren of their rightful share of the nation's
precious natural resources. With the loans from the International
Monetary Fund plugging the government's huge budget deficit this
year, they are even making the children, grandchildren and great
grandchildren pay to support their subsidized lifestyles.

Sadly, few people have ever spoken out against the cheap oil
policy as can be seen from the comments ahead of the 12 percent
average increase in domestic oil prices which came into force on
Sunday. Even non-governmental organizations, who claim to fight
for the poor, have opposed the increases. Politicians, including
the likes of Akbar Tandjung, were quick to distance themselves
from the increases even after they had endorsed the plan earlier.
Opponents of the fuel price increase sang the same tune: Protect
the poor people.

How long can they keep up this game of deceiving the entire
nation? Thanks to their own greed, the answer is not very long.

The cheap oil policy is responsible for the grossly
inefficient use of oil in Indonesia. Other countries that are not
as blessed (or as cursed) as Indonesia with oil resources have
long introduced energy conservation measures. Indonesia has not,
and as a result, its oil resources have been depleting at a
remarkably fast rate. One recent industry estimate says that in
less than 10 years, Indonesia will have to start importing oil
products more than it can export to meet domestic needs.

If and when that happens, no politicians in this country could
use fuel as a weapon to gain popularity or votes the way it has
been used these last three decades. Indonesians will have to pay
the going international market price for their fuel. And judging
by the trend in the world markets, by that stage oil prices will
have settled at above $30 a barrel. Compare this to the $10-$20
price range when Indonesia extracted most of its oil and our
children and grandchildren will have every reason to curse us.

Although we cannot undo past mistakes, we can and must rectify
them. We can still begin energy conservation measures, including
most of all by quickly phasing out the oil subsidy. Unfortunately
for our politicians, the most responsible and right thing to do
is not always the popular thing to do.

This week's 12 percent increase would hardly take domestic
fuel prices anywhere near world levels. With so little time left
before Indonesia becomes a net oil importer, it is the
responsibility of present day leaders to prepare the people,
whether rich or poor, for an era when they have to pay the going
market prices for their fuel, just like other people in most
other parts of the world.