Thursday, May 29, 2008

Oil Sheikhs and Words About Subsidies

The dependence on oil is taking a toll in the South East Asian region and beyond. The prices of fuel has skyrocketed by about 50% since last year and the only people benefitting from this phenomenal rise in oil prices are the oil sheikhs and shareholders of oil companies.

Singapore had never banked much on our natural resources. Palm and rubber trees provided us with some revenue, but in this little island, scarcity of land is an issue and thus, much of this land are now used for commerce with tall towers and skyscrapers peppering the island.

Ok, back to the fuel issue. The government has not given any subsidies but how they are helping is by keeping the value of the Singapore currency high, thus offsetting inflation. So, yes the prices of fuel has increased, but in the first place, fuel has always been used to power luxury vehicles, so the owners of these vehicles should be able to afford it. Prices of diesel has gone north too, and that has impacted taxi and lorry drivers. But still I believe the increase is manageable.

So if you plan to drive in Singapore, do not expect fuel prices to be cheap. Currently we are paying about S$2.10/ litre.

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