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span class="caption" style="width: 398px;">Fuel limits: A gasoline seller fills bottles in Slipi, Central Jakarta, on Thursday. The government says it wants to ban the sale of subsidized fuel to private vehicle owners starting in April throughout Java before expanding the program to other parts of the nation. JP/Bertho WedhatamaThe government’s plan to require all private car owners to buy non-subsidized Pertamax fuel would be an economic disaster because its price, now almost double that of subsidized Premium gasoline, priced at Rp 4,500 (50 US cents) per liter, is locked to the volatile global oil prices, an energy analyst says.

ReforMiner Institute executive director Pri Agung Rakhmanto said on Thursday that oil prices may soar to $140 per barrel as they did in 2008 following the current heated tension between world’s second-largest oil producer Iran and the US.

At present, Pertamax is sold at between Rp 8,000 and Rp 9,000 per liter, while the world’s oil prices stand at around $100 per barrel.

Pri Agung said that the government should instead raise the price of subsidized Premium to trim down the fuel subsidy, and allow everyone to use the fuel.

“Raising the prices of Premium by Rp 1,000 per liter from the current Rp 4,500 is the most reasonable policy the government can take,” he told reporters via a text message on Thursday.

Based on ReforMiner calculations, should the government increase the price of Premium in Java and Bali by Rp 1,000 per liter, the government would save up to Rp 24 trillion in unspent fuel subsidy in 2012.

Should the government choose to ban private cars from buying Premium, it may save around Rp 26.71 trillion, but it would place heavier economic pressure on private car owners, the institute added.

The government provides other cheaper alternatives for car owners, including liquefied gas for vehicles (LGV) and compressed natural gas (CNG), but car owners would have to pay Rp 15 million to buy the converter kit to allow their car engines to burn gas instead of gasoline.

“Don’t talk about gas-based fuels because the infrastructure will not be available in April [when the limitation on subsidized fuels distribution will be implemented], or even in the next two or three years,” Pri Agung said.

According to a roadmap presented to reporters by Finance Minister Agus Martowardojo, the first phase of the Premium fuel restriction will begin in Java and Bali starting in April 2012, followed by Sumatra in January 2013, Kalimantan in July 2013, Sulawesi in January 2014 and Maluku and Papua in July 2014.

Limitations on diesel fuel will go into effect in July 2013 for Java, Bali, Sumatra and Kalimantan, followed by Sulawesi in January 2014, and finally Maluku and Papua in July 2014.

All those government plans are subject to House of Representatives approval.

Spending on energy soared to Rp 255.6 trillion in 2011, a 30.9 percent higher from the planned Rp 195.3 trillion — of which Rp 165.2 trillion was for subsidized fuel.

Satya W. Yudha, a Golkar Party lawmaker in House of Representatives Commission VII overseeing energy responded to Pri Agung’s proposal, saying that the government would not dare increase the Premium price.

“Even if the government were brave enough to raise the Premium price, it cannot do it by revising the 2012 State Budget in May because the existing budget doesn’t allow the government to increase the price,” he told The Jakarta Post over the phone.

“My suggestion is that we also sell non-subsidized Premium. With that scenario, only public transportation vehicles and motorcycles could buy subsidized Premium, while private car owners, if they can’t afford to buy Pertamax, can buy non-subsidized Premium at its real economic price of around Rp 7,000,” Satya said.