Will Government Reduce Fuel Rates If Oil Prices Drop Further?

CRUDE oil prices are at their lowest since February, falling almost 25 per cent since July. Light sweet crude fell US28c yesterday to $US58.40 in Asian electronic trading on the New York Mercantile Exchange. Some oil experts predict further falls.

Prices have fallen because economic growth has slowed and energy markets have become less jittery about tensions such as those in the Middle East. However, some opine that prices were not likely to fall much lower because traders would see the opportunity for speculating.

Others like James Williams, an economist at WTRG Economics say that the market has "high inventories, high levels of exploration activity, no supply shortage, low consumption at this time of the year and no Gulf [of Mexico] hurricanes -- with lower chances of having one. The combination of these factors is consistent with prices below $50 per barrel."

It must be kept in mind that when the price of oil hit $US70, our government citing high subsidies promptly hiked fuel rates which unnerved the public. Although there was an opposition organised protest, the people by and large accepted it. By the same token if say the prices were to remain at the present lower level for some time will the government cut auto fuel prices? It'll go a long way in easing the increasing financial burden of the average Malaysian.

Of course only time will tell which way world oil prices will be shifting and if it is favourable it is hoped that the authorities seriously consider reducing prices. That is the only decision that can be considered fair by the still very patient public.