Idris Jala the MD of Malaysia Airlines is correct when he said that there is no global shortage of fuel. Worldwide supply is definitely limited and almost reached it's supply peak. Once reaching it's supply peak, fuel supply will start to decline resulting in lesser supply of fuel to the market. Only when that happen, there will be shortage of fuel. Vehicles will queue at the petrol stations, other equipment may stop operating and there could be chaos and riot on the street.
And for the time being or maybe in the next 5 to 10 years, there should be enough fuel supply. But why did Malaysia government under the leadership of Badawi suddenly panic and intend to remove the fuel subsidy immediately ?
Due to decreasing oil reserves, fuel price is definitely going to increase but not as sudden 40% jump especially if the rakyat is not prepare for them. It is guaranteed that once the oil price shoot up, everything else shoot up. Badawi is taking a drastic change too fast.
And there is no government policies or plans to cushion the effect and ensure that the rakyat is not too burden by the increase in oil price. I think he is ill advised by his Minister of Finance and he should let Idris Jala to consult him on national economy and market situation.
* Jul 15, 2008: Who is Idris Jala
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Idris: There’s no global fuel shortage
By WONG SAI WAN
ISTANBUL: There is no shortage of oil in the world and its present price level was driven up by unreal speculation, said Malaysia Airlines managing director and chief executive Datuk Seri Idris Jala.
He said the present oil price at over US$135 was unrealistic and based on certain global events that might have caused a shortage of supply.
“These people (speculators and hedge funds) buy oil futures and say that this or that event may cause an oil shortage.
“Not very long after this, people react to this and by then the message would be ‘there is a shortage of supply’ even though there is none,” Idris told the international media here at the close of the 64th International Air Transport Association annual general meeting.
IATA, which is an association of legacy full service airlines with over 200 members, had issued a statement at the end of its meeting that the industry was now in a state of an emergency because of the fuel price crisis.
Idris was a former senior executive with Shell Plc based in London and the Hague for almost 20 years. While there, he had headed various departments, including business development.
Speaking as a former oilman, Idris said there were two ways to see whether there was an oil shortage.
“First, look at the oil tankers at sea. If they are not moving and just floating out at sea, that means they have no crude or processed oil to transport. That is not happening and that means there is no shortage.
“Second, go to the petrol stations. If there are long queues, that means there is a shortage. Again, this is not happening and this can only mean there is more than enough supply.
“As an ex-oilman, I tell you there is no shortage.”
Idris pointed out that certain analysts and financial companies that produced reports about the shortage were also oil futures traders.
Asked what he thought was the fair value of crude oil at present, Idris replied: “US$40.”
He also criticised speculators and hedge funds, saying that he did not trust anything that he could not touch.
“I always believe in the brick and mortar – something I can touch. These people are trading with nothing.
“Many years ago, we at Shell had wanted to buy Enron. I was leading the team then and we hired over 60 consultants to study how a company with no oil fields, refineries or gas stations could make so much money.
“One of the consultants tried to convince me to recommend to the Shell bosses to buy Enron but I said no because I could not touch what they were trading in,” Idris said in the one-hour briefing for the media about MAS’ performance and future.
He only expressed his opinion on the oil crisis after being asked by several journalists.
Idris was proven right on Enron because the so-called energy company collapsed four years ago under massive accounting fraud.