Towards more efficient fuel use

Towards more efficient fuel use

By Otto Soemarwoto

JAKARTA (JP): Fuel has been heavily subsidized by the
government. Before the recent price hikes the subsidies amounted
to Rp 27.54 trillion consisting of Rp 16.17 trillion for oil and
Rp 11.37 trillion for electricity. In accordance with the IMF
agreements the subsidies must be gradually abolished.
Consequently, the prices of fuel and electricity were increased.
This, however, caused protests and riots, and after consultation
with the legislature the government reduced the price increases.

In theory the fuel subsidies are to help the poor. For this
reason about 68 percent of the total subsidies were for kerosene,
supposedly the main fuel used for cooking by the low and the low-
middle income people. However, according to Potensi Desa (village
potential) statistics of 1990, in the rural areas only in a very
small percentage of kelurahan (subdistricts), i.e 3.2 percent,
was kerosene used for cooking. In most kelurahan the people used
wood. Therefore, most villagers did not benefit from the kerosene
subsidies. Even in urban areas 35.8 percent of kelurahan used
wood. In the middle and high income families gas is the primary
fuel for cooking. Wood is not used at all.

Another important use of kerosene is for lighting. In the
villages kerosene lamps are used for reading mostly by the well-
to-do families, and even then only until about 8 p.m. to 9 p.m.
After that very simple small wick lamps are used. The poor
families mainly use this latter type of lamp. In cities of
course, electricity is used for lighting. But lower income
families use only a small amount of electricity, usually just a
few low wattage lamps. The richer people become, the more they
use electricity for all kinds of electric goods, such as TVs,
electric and microwave ovens, kitchen utensils, refrigerators and
washing machines. It is not unusual to find the entire house of
the rich air-conditioned.

A major use of oil as fuel is for transportation. Many high
income families have more than one car, often three or even more,
one for the husband, one for the wife, one for the children and
one for the maid to shop for daily needs. In upper income
families the adult children may each have a car for their own
use. Before the current economic crisis middle income families
were also eager to have more than one car and the upper-lower
income families were starting to acquire cars, albeit old second-
hand ones. As a result the rate of growth for the number of cars
has been high, and consequently, also the rate of growth for the
volume of traffic. Hence, although many new roads have been built
and existing ones broadened, the roads have not been able to keep
pace with the increasing volume of traffic, even in large cities,
like Jakarta, where highways and toll roads have been
constructed. Increasingly, troublesome traffic jams occur in many
cities.

People have electrical household goods and cars not merely to
enjoy their services, but because they have become important
symbols of status, success and modernity. Being symbols they have
to be shown conspicuously. This in turn has a strong
demonstration effect, driving the desire of other people to own
them too. On the one hand this has the positive effect of
stimulating the economy, but on the other it leads to a highly
resource depleting and polluting lifestyle. Cars, the number one
status symbol, are used for short distances. This can be inferred
from the statistical data of 1996 that most households live at
distances of less than 4 km from shops and markets, schools and
recreation areas. This can also be clearly seen from maps of
cities like Bandung, Yogyakarta, Denpasar, Medan and
Ujungpandang, just to name a few. Even in the city of Jakarta
thousands of households are located within a distance of 5 meters
of Jl Sudirman-Jl Thamrin and Jl Rasuna Said, the main business
centers of Jakarta. People living in Kebayoran Baru also live not
very far from shopping centers and public buildings, such as
schools, mosques and churches. In fact, the spatial structure of
cities in Indonesia is such that offices, shops, markets, schools
and public buildings are interspersed with residential houses. Of
course, there are many people who do live at considerable
distances from their workplaces, particularly with the
proliferation of satellite towns around major cities. But the
important point is that undoubtedly many car trips are of short
distances of less than 5 kilometers, which is a very inefficient
use of cars and gasoline. The inefficiency is made worse by the
fact that in the upper and middle income families cars often
carry only one passenger. The traffic jams and one-way traffic
systems also increase the inefficiency of fuel use.

Traffic is also an important cause of heat islands in cities.
These are areas of higher temperatures surrounded by cooler
areas. There is no quantitative data on heat islands in
Indonesian cities. Qualitatively, however, such heat islands are
being experienced by people in the larger cities. People who have
resided for a long time in Bandung, say since the 1950s, complain
that Bandung is not cool anymore. While in former years sweaters
had to be worn in the evenings and early mornings, they are not
needed now. Because of the heat islands, more middle and upper
income families install air-conditioning in their homes. Their
cars are also air-conditioned. But air-conditioning also
contributes to higher heat islands. The lower income people,
however, travel on public transportation which is often crowded
and does not have air-conditioning. Therefore, as we go up the
economic ladder more fuel is being consumed per family, both
directly to fuel cars and indirectly by consuming more
electricity. Consequently, the higher the income, the more the
fuel subsidy is enjoyed. As mentioned above, even the kerosene
subsidy does not get to the poor people. Clearly, this is an
unfair system. The increase in fuel prices exacerbates the
unfairness, because the lower income families are harder hit by
the higher fuel prices.

A fairer system would be to force those who use more fuel to
pay an increasing tax for private car ownership, preferably by a
steep progressive system, i.e. the second, third, etc. car would
have steep increases in tax. Conversions of green areas for
parking lots could be limited and heavily taxed, because they
also contribute to the problem of overland flow and floods, and
the creation of heat islands. As a consequence, parking lots
would be reduced and parking fees would be increased. These
measures would force the people to use their cars more
efficiently which would result in less fuel consumption, and
hence, also less government subsidy.

Another benefit would be decreased air pollution which,
according to the World Bank, has caused a loss of about US$200
million per year, just for Jakarta alone. For the whole country
the loss would presumably exceed $1 billion, since cities like
Bogor, Bandung, Semarang, Yogyakarta, Surabaya, Medan, Palembang
and Ujungpandang have large populations and many cars. The
prevention of health-related losses would be of the order of the
IMF installment. Much of this benefit would go to the poorer
people who are daily exposed to high levels of air pollution,
e.g. the street vendors or kaki-lima. These are also the
population group who can ill afford to pay additional health
expenses.

Short distance trips can be conveniently done by walking and
bicycling. To encourage this the government should formulate a
new transportation policy in which these two modes of transport
are included as integral components. As a consequence, safe and
pleasant pedestrian walks and bicycle lanes would have to be
constructed in cities and between towns and villages. The
construction of pedestrian walks and bicycle lanes would be
cheaper than roads for motorized vehicles. They could be planned
as part of the padat karya (labor intensive) projects. Mass use
of bicycles would create many small- and medium-scale enterprises
(SME) and many jobs for the production of bicycles and their
spare parts, assembling and marketing, particularly since these
SMEs would not depend on many dollars. Therefore, the padat karya
projects for the pedestrian walks and bicycle lanes and the SMEs
would help to overcome the economic crisis and its impacts. The
growth of SMEs would also lessen the socioeconomic gap between
the poor and the rich. Since about 30 million families live
within a distance of 4 km from shops/markets, schools,
recreational areas and other public buildings, the potential
domestic market for bicycles is very large. But high quality
bicycles also have a good potential for export. Taiwan, for
example, exports 3 million bicycles to Europe.

It should be stressed here that this is not a proposal to
substitute cars with walking and bicycling. These two modes are
for short distance travel with light burdens, while motorized
vehicles are for long distances and heavy loads. In other words
the motorized and non-motorized modes of travel are complementary
to each other. To stimulate walking and bicycling high level
government officials and the rich should give the example that
there is nothing wrong with walking and bicycling for short
distances. The IMF and the World Bank could play a positive role
by suggesting to the government that this would be an
economically appropriate and environmentally sound way of
reducing fuel subsidies which would contribute to overcoming the
economic crisis.

Prof. Dr. Otto Soemarwoto is an expert on environmental
matters, based in Bandung.