Oil and Gas

Fuel Prices Decreased Again

VIVAnews - As of today, Monday, 15 December, the new lower prices of fuel will be implemented.

President Susilo Bambang Yudhoyono, on Sunday, 14 December, announced that the price of fuel would be decreased again effective today, 15 December. He said that the price of premium fuel would be decreased from Rp 5,500 to Rp 5,000 (45.37 cents). Diesel fuel price will down from Rp 5,500 to Rp 4,800 (43.56 cents). Only kerosene price will remain at the price of Rp 2,500. (22.69 cents)

The decision to lower the prices was a result of a limited meeting between the President, Vice President Jusuf Kalla, and several ministers.

“The (new) prices will be effective on 15 December 2008 at 00.00 WIB,” said President Yudhoyono, Sunday, Dec. 14. He said that the lowering of the prices is a result of the fall in world oil prices.

He hopes that the reduced prices would lessen the society’s burden and help with the cost of production for businesses. “As such, the people’s purchasing power will be maintained or even increased,” continued Yudhoyono.

Finance Minister Sri Mulyani added that this would help with the economy. “We hope that this would reduce global economic crisis impact on national economy,” she said.

Mulyani revealed that in light of the lowering of prices, owners of fuel stations will be compensated. “The mechanism of compensation, how much it would be, and how it would be determined, would be handled by Minister of State Owned Enterprises, Pertamina, and the related fuel stations,” she said, Sunday, Dec. 14.

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Mulyani said that with such compensation, it is hoped that there will not be any fuel scarcity like what happened when the prices were previously lowered on 1 December.

When questioned about the decision to lower the prices, the Presidential Spokesperson, Andi Mallarangeng said that it was a calculated and not a sudden move. “So, it’s not like the government suddenly announces this decrease. It’s not just like that. The government has been evaluating world oil prices since a few days ago,” said Mallarangeng to VIVAnews, Sunday, Dec. 14

Mallarangeng explained that to determine how much the prices should be lowered, the government had to consider the consequences on the State Budget (APBN), inflation, and subsidies.

“How much should the decrease be is calculated, and then (the government) came to the figure of 5,000 rupiah for premium and 4,800 rupiah for diesel,” said Mallarangeng.

Mallarangeng asks owners of fuel stations to be fair in dealing with the fall in prices. “Previously when there was an increase in prices of fuel, everyone was racing to increase the price of their products. Now it has to be fair too. Since there is a fall in fuel prices, everyone has to decrease the price of their products,” he said.

Meanwhile, Pertamina has guaranteed that the stock of subsidized fuel in fuel stations is secure. It guaranteed that supply problems that occurred when the price of premium fuel was lowered recently on 1 December will not happen again. “I guarantee a normal supply,” said Pertamina’s Public Relations officer Anang Rizkani Noor to VIVAnews, Sunday, Dec.14.

According to Noor the circumstances surrounding the lowering of the prices this time is different from that on 1 December. This time it was done suddenly. “That’s why [previously] there were problems with fuel stations who did not want to keep too much stock for fear of experiencing losses,” said Noor.

A brief fuel scarcity occurred prior to the previous lowering of prices. Many fuel stations decreased their supply in order to minimize losses. At that time, Noor said, the decrease in supply at fuel stations did not create a problem because the public also postponed their purchase until the new lower prices became effective.

It only became problematic when the new prices became effective. There was a sharp increase in public demand for premium fuel. Meanwhile, the fuel stations had difficulties responding to the public demand. “At that time, almost all fuel stations asked for allotments from Pertamina. Meanwhile, we needed time to supply these fuel stations at the same time.  I think that this time a shortage would not occur,” said Noor.


VIVAnews writers Ita Lismawati F. Malau, Pipiet Tri Noorastuti and Muhammad Hasits contributed to this article.

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