High Oil Price IN MALAYSIA Sucks ?

Yeah i think the high oil price in Malaysia sucks. But there is really nothing the citizens can do other than to protest protest protest. The fundamental of the high oil price remains the same even with all the uncles and aunties protesting 365 days.

In my not so humble view, what are the reasons for the spike of oil price ?

Number 1 :
We have an uncontrolled growth of Money supply, if you go to
http://www.shadowstats.com/alternate_data

You would see the broadest measurement of money supply growth ( M3 ) in US is at > 15%. To make matter worse, The central banks around the world are also increasing money supply to match the level of money growth in the US of A ( dollar is a word reserve currency ). With so much money around the world, it has to go somewhere, in the early 1990 or 2000, the money managed to go to housing and stock market, thus we had boom in these areas. Now that the housing and stock aint doing well due to massive credit crisis. The money has to go somewhere, in this case, it has chosen commodity - oil , gold and precious metals. But eventually, I think we will have price increase in every sectors of economy when the government around the decides to fight the credit crisis ( debt ) with inflationary policy.


Number 2
The world has not discovered major oil field in many decades, and the production of oil has not been able to meet the demand of oil from developed and emerging nations like China and Inda. Some say we still have hundred years of oil underground but then if we cannot dig it up, refine it to petrol level that we can use, then it's meaningless . So in this case my friend we have imbalance supply and demand of oil. The price can only go up under this circumstance.

Number 3

The weakening dollars - This is related to reason # 1, when we have too much of certain thing the value is worth less. Since Oil is priced in dollar, it makes sense for wise investors to put their money on tangible goods and commodities like oil. When every millionaire investor start hedging their wealth on oil, you know what will happen to the price of oil

Number 4

Positive "Speculation" by certain sectors. If you run an airline company that's on the verge of bankruptcy . what would u do to cut cost ? obviously you gonna hedge big time on oil. That's what one airline company in US did to maintain profitability. If every oil dependent companies starts doing this. it can only make oil price going higher.


Number 5

War and political tension around the mideast. When another war breakout in Iran and Israel, you can easily see the oil price shooting up to the roof. ( 200-300 / barrel )

So as we can see, the best way to solve the oil crisis is to actually deal with the above 5 reasons. I tell you Malaysia govenment cannot solve this alone, it has to involve every government in the world to take serious look on the issue and act according. For instance, how do we reduce the dependency on oil with other alternatives ?( eg Hydrogen ? Bio fuel ? ) How to resolve the tension between Israel and Iran ? How do we stop the excessive money growth ?