The $11 billion question

How do you burn Rp 110 trillion (more than US$11.3 billion) in less than a year? Easy. Keep domestic fuel prices constant, no matter how far oil prices soar on world markets.

That is the size of the bill that the government must pay off to subsidize the owners of gas-guzzling SUVs, industrialists and other users of fuel in this country if world oil prices stay at an average of $50 a barrel this year. The bill will soar to Rp 138 trillion ($14 billion) if it averages, as they seem likely to now, $60. Most of that money will evaporate into thin air with the burning of the gasoline and other subsidized fuels.

And that appears to be the commitment of this government: Keep burning. Most of us recall that back in March, after the government increased domestic fuel prices by 29 percent, the words that came from the likes of Vice President Jusuf Kalla and chief economics minister Aburizal Bakrie were "No more fuel price increases this year." Everybody read their lips and remember it to this day.

Consistent to this commitment, the government responded to the latest shortage in premium gasoline this week by ordering the state oil monopoly Pertamina to increase domestic supplies. At the same time, the government is contradicting itself by appealing to the public to conserve the use of fuel, while doggedly refusing to increase prices as a means of rationing consumption. No wonder no one is listening.

It is obviously easier for the government to ignore poor families who are screaming at the high costs of sending their children to school, or whose children are so malnourished and so weak they cannot even cry for help. And it is obviously not easy for the government to ignore the honking and roaring of motorists complaining about the long lines of cars and motorcycles outside gas stations in Jakarta and other major urban centers.

The government once again is trying to do the popular thing at a time when tough and bitter policies are called for. It defies President Susilo Bambang Yudhoyono's famous, but now almost forgotten, off-the-cuff remark "I don't care about my popularity", which he uttered just weeks before raising gasoline prices in March. Given the soaring cost of the fuel subsidy along with the increasing world oil prices, now more than ever, the president should take the bold and unpopular decision to address the issue.

In the prelude to the March fuel price increase, the government campaigned hard on the theme that the low-priced gasoline and diesel for fuel subsidies, then estimated at more than Rp 60 trillion, was enjoyed mostly by the rich. The more cars you drive and the more lights you turn on, the more subsidies you receive from the government. An increase in fuel prices would cut the subsidy bill and make available huge sums to spend on helping the poor. This was a compelling argument for increasing fuel prices earlier this year, and it eventually won the day after stormy protests from the public, the House of Representatives and the media. It won because it made perfect common sense, as bitter as it was a pill to swallow for most people.

But now, with the subsidy bill hitting Rp 110 trillion, the government is singing a completely different tune. It is no longer saying that the huge subsidy given to the rich is morally indefensible, even as the poor are screaming for assistance in enrolling their children in school, in getting access to affordable health treatment, or for the millions out of work, in getting food on the table. If, as the President said over the weekend, that corruption is morally wrong, then taking money from the poor and giving it to the rich, which is what this fuel subsidy is all about, is just as reprehensible.

The signals the government is sending through its measures in dealing with the soaring world oil prices is that it wants to do the popular thing, which is not necessarily the right thing. It is worth remembering that Megawati Sukarnoputri lost the presidential election to Susilo last year in spite of freezing domestic fuel prices throughout 2004. Doing the popular thing does not guarantee votes. The president should know that.

Does President Susilo have the courage to increase fuel prices now? That has now become the $11 billion dollar question.