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Classical Economic Theory says that if there is little supply then the price of the good will go up. This is the law of supply and demand. How true this law in Indonesia?
Classical Economic Theory says that if there is little supply then the price of the good will go up. This is the law of supply and demand. How true this law in Indonesia?
In the recent months, oil price is dropping from more than 100US$ for each barrel to approximately 40US$ for each barrel. This price drop has influenced energy pricing policy in Indonesia. Gasoline price was cut from IDR 6000 per liter (premium) to IDR 5500 and finally to IDR 5000. When the gasoline price was still in the IDR 4500 per liter level, crude oil price was in the level of 70-90US$ per barrel. Because of that, oil and gas pressure group is always trying to convince the government to again cut the gasoline price. The group calculated that normal premium class gasoline can be lower than IDR 4000 per liter. This discussion is so far only in the discussion level, but the issue has been affecting anyone.
One political party, the ruling party, use gasoline price cut as campaign material. They put the campaign in the television. This campaign indirectly affected the decision making of businessmen especially those in oil and gas business (gas station business). The campaign has created an impression that the current government will suddenly cut gasoline price again without enough notification. This condition has made those businessmen hesitated to stock gasoline and provide supply to his area. They are afraid that the stock that was bought using old price will be sold using new lower price. This condition has created gasoline shortages in many areas in Indonesia.
There are some arguments that the shortage is due to delayed transport. As you might know, transportation using small sea vessel is a bit dangerous now. There are reports of sinking boats or ferry boats in many places in Indonesia. This is due to the weather. Shortage is becoming more severe in outer islands because those area are depending so much on sea transportation. Pertamina said that there is no problem with the supply. Pertamina's refinery is fine and therefore there is no worry for fuel shortage. But as you might already see, things happen differently. There is still fuel shortage.
Anyway, since the energy price in Indonesia is regulated by the government, above mentioned economic law does not apply here in Indonesia. It is worth to note that politic has very much to do with the shortage and the weather just make it worst. Therefore the government should not make people confuse and political party should not use such sensitive issue for campaign material.
One other thing that I have learned from this fuel shortage is that businessmen do not have patriotism. They are just thinking of money money and money...in the last price increase those people have gained many profits because they stocked gasoline using old lower price and sell it with higher price. This is now the time for them to be patriotic. Rich class and middle class in Indonesia are just unreliable...
One political party, the ruling party, use gasoline price cut as campaign material. They put the campaign in the television. This campaign indirectly affected the decision making of businessmen especially those in oil and gas business (gas station business). The campaign has created an impression that the current government will suddenly cut gasoline price again without enough notification. This condition has made those businessmen hesitated to stock gasoline and provide supply to his area. They are afraid that the stock that was bought using old price will be sold using new lower price. This condition has created gasoline shortages in many areas in Indonesia.
There are some arguments that the shortage is due to delayed transport. As you might know, transportation using small sea vessel is a bit dangerous now. There are reports of sinking boats or ferry boats in many places in Indonesia. This is due to the weather. Shortage is becoming more severe in outer islands because those area are depending so much on sea transportation. Pertamina said that there is no problem with the supply. Pertamina's refinery is fine and therefore there is no worry for fuel shortage. But as you might already see, things happen differently. There is still fuel shortage.
Anyway, since the energy price in Indonesia is regulated by the government, above mentioned economic law does not apply here in Indonesia. It is worth to note that politic has very much to do with the shortage and the weather just make it worst. Therefore the government should not make people confuse and political party should not use such sensitive issue for campaign material.
One other thing that I have learned from this fuel shortage is that businessmen do not have patriotism. They are just thinking of money money and money...in the last price increase those people have gained many profits because they stocked gasoline using old lower price and sell it with higher price. This is now the time for them to be patriotic. Rich class and middle class in Indonesia are just unreliable...
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