Fuel subsidy is the sugar that is sweet, but kills

An Electric Vehicle #EV is most efficient in slow moving & stop-go traffic, which makes it perfect for urban use. Driving an EV on highways (above 100km/h hour) is the most inefficient use of energy in an EV.

Compare this to a regular fossil-burning vehicle.

Urban traffic is where a fossil-fuel vehicle is most inefficient; the engine keep on running while in slow traffic, burning your money away for minimal travel. A fossil-fuel car on the other hand, is most efficient at highway speeds, where the RPM is low running on a single gear (4th or 5th).

Consider the fact that Malaysian Government is expected to spend ~RM47billion in fuel subsidy this year.

To give you a sense of the scale, the MRT3 construction cost is RM34 billion (the entire project including land acquisition & project management is RM50 billion).

EVERY year, we could have:

  • Built 1 more MRT3
  • Built 33 hospitals with 1000 beds
  • Funded healthcare for Ministry of Health 1.5 times on top of existing RM32bil budget for healthcare
  • Funded Education Ministry 1 time over existing budget
  • Funded Higher Education Ministry 4 times over existing budget

We are so rich that we can afford to burn so much money year after year. In another perspective, we are so fossil-fuel & car-dependent that we balk at ‘expensive’ public-transportation projects while no one bats an eye when our ANNUAL fuel subsidy is on par.

At prevailing fuel prices, it is not surprising to expect for every RM2.05 you spend per liter of fuel, the Malaysian Government (us really, the tax payers) is also spending another RM1.80-RM2.00 as fuel subsidy. This means, if you are refuelling for RM100 for a full tank, the government is also forking our RM100 for your tank.

Imagine how much of that subsidy is gone in mere traffic jams.

Yes, it is this fuel subsidy that helps Malaysia to have one of the lowest inflation GLOBALLY. It keep the fuel cost low for transportation, construction, food production and so many other industries.

Fuel subsidy indeed help keep our cost of living low compared to peers in the region.

However as for inflation, in my untrained mind, is not because of the subsidy per-se.

Our inflation is low because of us pegging the fuel price to RM2.05, which means we (the rakyat) are relatively cushioned against global events while the government faces the brunt of raising fuel prices.

The pegged fuel price allows businesses continue to operate with certainty that the cost will not shift drastically, hence limiting price adjustments month-over-month.

In other fuel-producing countries, the raise in global fuel price is a boon because fatter profit. However in Malaysia, it is a bane because the government has to spend more to subsidise.

What a conundrum.

Fuel subsidy is akin to sugar. It tastes sweet, people easily get hooked and wont let go of it.

Tomorrow is the celebration of Malaysia’s formation.

For our own future, let us support and vote for politicians who are brave enough to reduce our dependencies on fuel subsidies.

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