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Motorists turn to subsidized gasoline as prices surge
The sales of subsidized fuels rose sharply in the fi rst four months of the year as owners of expensive cars may have turned to cheaper fuels to offset the surging price of non-subsidized fuel, an offi cial said
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he sales of subsidized fuels rose sharply in the fi rst four months of the year as owners of expensive cars may have turned to cheaper fuels to offset the surging price of non-subsidized fuel, an offi cial said.
Downstream oil and gas regulator BPH Migas said on Wednesday that the sales of subsidized fuels in the first four months of 2011 topped 12.9 million kiloliters, exceeding the government’s quota of 12.3 million kiloliters by 5.3 percent.
BPH Migas committee member Adi Subagyo said the surge in the sales of subsidized fuel might be caused by the sharp increase in the price of non-subsidized fuels that has forced car owners to seek more affordable options.
Fuel consumers in Indonesia were very sensitive to prices, he claimed. “This country’s fuel consumers are sensitive to prices. They aren’t quality-minded yet. When prices increase, they’ll directly convert [from non-subsidized to subsidized fuel],” Adi said.
On the back of that trend, he predicted that this year’s subsidized fuel consumption would surpass the quota of 38.5 million kiloliters, further pushing up the cost of the fuel subsidy. “Consumption might reach between 40 million and 42 million kiloliters by the end of the year.
It depends on how successful we are in maintaining consumption so as to not to exceed the quota for the rest of the year,” he said. In April alone, consumption of subsidized fuel reached 3.31 million kiloliters, about 5.4 percent above the quota of 3.14 million kiloliters and up 6.8 percent from 3.1 million kiloliters in the same month last year.
To adjust to higher global oil prices, state oil and gas company PT Pertamina and other private gas station operators have raised prices for non-subsidized fuels to between Rp 9,000 (US$1.05) and Rp 10,000. The price of Pertamina’s Pertamax 92-octane fuel in Greater Jakarta rose by 4 percent to Rp 9,050 (US$1.05) per liter from Rp 8,700 previously.
The price of Pertamina’s Pertamax Plus 95-octane fuel in Greater Jakarta was currently at Rp 10,000 per liter, up 9.28 percent from Rp 9,150, while the price of the company’s Pertamina Dex diesel fuel was set at Rp 10,350, down 4.16 percent from Rp 10,800.
Shell Indonesia has also raised fuel prices to adjust to surging crude oil prices. Shell Super, Shell Super Extra and Shell Diesel are selling for Rp 9,050, Rp 9,350 and Rp 9,700 per liter in Greater Jakarta The government has allocated Rp 95.9 trillion to subsidize fuel this year. Critics deem that amount too high, arguing that funds would be better allocated for infrastructure development, health or education.
