Sunday, May 25, 2008

On that Hardship

The recent sharp increase in global oil and commodity prices have affected the life of many people, in both positive and negative ways. As for Indonesians, after days of uncertainties, the government of Susilo Bambang Yudhoyono had finally announced the increase of fuel prices by an average of 28.7%, effective May 24. University Students and various elements of the society hit the streets to voice out their oppositions and disagreements. Some turned ugly. Opportunist politicians and analysts got free rides.

The government decision was based on realities in the oil market, as well as other reasons as a consequence of those realities that have been publicly known and discussed in various media and occasions. Like it or not, the price increase is needed. Whoever governs the country will do the same; maybe they will even do it earlier, as other heroic options were only good on papers and will probably do more harm than good to the country in the long run.

The increase in standard of living in China, India and other developing countries have been blamed by leaders in developed countries for the significant increase in the demand for oil and food commodities that pushed the prices upwards. On the other hand the developed countries have been blamed for years for their wasteful and excessive consumption of energy and resources that contributed severely to the global warming.

Improvement of people's welfare, however, should be seen as a blessing instead of a curse. Furthermore, persons in developed or developing countries have the same rights to use energy and resources and to consume foods as they deem necessary to make them enjoy better lives.

Powerful global oil companies and cartel such as the Seven Sisters and OPEC were also blamed for the fuel price hike. The Seven Sisters refers to giant oil companies that once dominated global oil production, refining, and distribution. They are Exxon, Shell, BP, Gulf, Texaco, Mobil and Chevron. After mergers, the remaining are ExxonMobil, Chevron, BP and Royal Dutch Shell. Whilst Financial Times has named the New Seven Sisters in 2007, the four oil giants remain powerful in determining global oil market.

The absurd Iraq war and the threat by US military forces to attack Iran and destabilize Venezuela are also blamed for the oil price volatility. These are some of the signals used by future market traders in places such as New York Mercantile Exchange to determine the fluctuation of global oil prices.

Future market traders are probably the major culprits behind the increase in global oil prices. The soaring prices of other basic commodities were partly also results of their activities. While what they are doing in the future markets are probably perfectly legal, it's a question whether they are ethical as the wealth they accumulate have to be compensated with hardships and sufferings by millions of unfortunate people all over the world.

Traders are traders, and they are always looking for more profit, the higher - the faster - the better. Only conscience will limit their damaging activities towards poor countries and societies. Unfortunately, only greediness and egos are the accepted currencies in the dealing rooms. Those who are inside the circle can possibly make changes for them to act more responsibly. The governments where they operate may as well issue regulations that will provide more protection to people's interests.

To me, it's a zero sum game: the happiness because of the fulfilled greediness and the joy because of the fulfilled egos by the more fortunate and smarter people are equal to the hardships and sufferings because of the decrease in the purchasing power and the lack of access to food as well as other basic commodities and services by those poor and less educated people.

How people act during difficult times, however, will determine the path of the road they travel, either towards the betterment or destruction. Instead of hitting the streets and playing dirty politics that make life even worse and more stressful, people shall focus their energy and brains to formulate steps to deal with the hardship in a more dignified and innovative ways.

What seems to be negative at the beginning, can turn to be positive later, and what seems to be a curse can potentially be a bless. It's a mindset game. As a final note, any imbalance opposing forces in universe will eventually find its new point of equilibrium, albeit only for a short while.


  1. Why would future market traders act that way? Why now (past few years)? One explanation is because of the weak US dollar. Oil is priced in US dollar. Hence, the weaker the dollar gets, the more attractive dollar-denominated oil future contracts are.

    (so blame US economy - Bush - for this?) :)

  2. @bleu: I guess you are right, money will go to places where they can produce better returns for the owners...

  3. I have been trying to be more positive when it comes to things that are happening in our country, it is hard, but I am still trying.
    I do agree with you, things aren't always what it seems. So I do hope this rise in fuel prices that may seem like a bad thing now, will result in a good thing in the future.
    As for point of equilibrium, it seems that point has shifted a lot lately, although it's normal i think, after all the only constant thing in life is change, right?

  4. hmmm... uncle pakdhe, saya musti narik nafas berkali2 sebelum menulis koment ini. Satu sisi saya juga sama berharapnya seperti paman dan barangkali seluruh bangsa ini, bahwa kenaikan BBM brgkali bukan keputusan yg populis, namun bisa membawa dampak yg baik buat negri ini kedepannya,

    tapi disisi lain, belum2 saya sudah skeptis melihat kondisi bangsa ini yg makin terpuruk. Ndak usah jauh2 kemereka, saya ajah susah kalo mo beli apa2 mesti bawa catatan belanja, supaya ndak lapar mata, trus overbudget dan akhirnya mesti ngencengin iket pingang sekencang2nya sampai engap2 sebelum masa 'gajian' lagi tiba.

    Itu baru saya, yg notabene selama ini hidupnya sudah cukup berkecukupan, bagaimana dengan mereka yg dari dulu aja udah ndak sangup beli beras... sekarang makin ndak sanggup uncle pakdhe :D , bahkan buanyak yg akhirnya mencoba mengakhiri hidup dengan bunuh diri karena tidak tahan menderita, melihat anak istrinya kelaparan (ingat peristiwa tukang gorengan yg bunuh diri beberapa bulan lalu gak, waktu harga tempe naik... baru tempe lohhh... bagaimana kalau BM naik... apa coba industri makanan yg tidak ada hubungannya dengan kenaikan BBM ini... nyaris semua sektor khan?, dan hal ini tentu saja membuat harga2 meningkat, terkait dengan biaya produksi/opex yg meningkat).

    Nahh, solusi pertama yg ditawarkan pemerintah adalah memberikan BLT (dikasih ikan-nya langsung)... tapi inipun sangat2 tersendat, [yg dengar2 gosipnya malah nyangsang ke kantong teteh, aa, istri, paman, bibi, dan seluruh handai tauland pak lurah/pejabat pembagi BLT]

    Yg kedua katanya Menciptakan ladang usaha (dikasih perahu untuk mancing)... duhh, saya berharap ini bisa terwujud... tapi sekalilagi maafin saya kalo saya skeptik lagi...

    Solusi ketiga... Duhhh, lupa, hehehe... habisnya denger di radio SONORA sambil nyetir sambil mencibir dan ngomel2, "uughh, taruhan, duitnya pasti masuk kantong lagi, rakyat tetep ajah kelaparan"... HAHAHAA, jadi waktu saya dengerin 3 solusi pemerintah dalam mengatasi masalah yg timbul dari kenaikan BBM ini...

    Maklum dech, saya paling gak betah gak ngomentarin sesuatu yg ngganjel dihati saya...

    Termasuk posting ini, hehehehe... udah tarik nafas dalam2 tuh mas, biar ndak terbawa emosi dan koment panjang2 di blog orang... Teteuppp ajah long is my trademark... :D

    Sooo, terima nasib ajah lah uncle pakdhe... trima nasib BBM naik... dan trima nasib diinvasi blogger perempuan cerewet yg ndak bisa diem dan ndak bisa coment pendek2, seperti... "HIII, NICE POST... TUKERAN LINK yukkk... "

    Uuuggghhh... go to the sea, alias kelaut aja dehhh, hahahahaha... :D

    salam hangat,

  5. Maybe we should promote the use of public transportations and promote the subsidized public transportation. It's not so bad to take the busway or the Pakuan train once in a while. Just make the best of it. Conserve the energy, conserve the world.

  6. @rimafauzi: that's a good start nduk, not only it will change the way you see things, but it will give you peace of mind and may come up with something new that you have never thought before, for the country.

    Well, today I switch off lamps in my office room, and the pantry, not to save money, but to save energy, and we still can work without any problems, just using lights from windows. We've never thought that it was a waste energy to use lamps during daylight...

    Yeah right nduk, the point of equilibrium has shifted a lot, but don't you think that it may go back to previous position one day in the unkwown future, even though in higher level ...

    @silly: nduk, banyak yang kurang kuat mungkin akan gugur, namaun banyak juga yang kurang kuat akan menjadi lebih kuat dengan kesengsaraan dan cobaan yang bertubi-tubi.

    Bukankan membuat catatan belanja itu baik, sehingga kau tidak kalap, karena semua terlihat murah dan terbeli, sehingga apa pun yang sesungguhnya tidak perlu pun ikut2an masuk juga ke keranjang blanja (btw, keranjang blanja itu katanya yang paling kotor dan banyak mengandung bakteri).

    Saya kadang mikir, di mana ya para ketua RT, RW dan kelurahan. Jika saja mereka lebih rajin mendata warganya, dan gak malu teriak minta bantuan, mereka akan bisa ikut membantu menghindari hal-hal yang tragis seperti yang dialamai tukang gorengan yang kau ceritakan itu.

    Tantangannya memang pada pengawasan BLT itu, dan BLT tentu bukan satu2nya jawaban, apalagi itu hanya bersifat sementara. Yang ngemplang BLT ya memang sangat keterlaluan. Jika karena mereka lapar, maka itu bisa dipahami meski tidak juga bisa dibenarkan, namun jika karena serakah, semoga mereka disadarkan.

    Jangan dibuang ke laut nduk, mbok ke gunung wae masih adem....

    @Nurul: I absolutely agree with you nduk that the use of public transportations shall be promoted and subsidized.

    Instead of using car, one of our partners today used busway to go to our office for a meeting. This change of habit shall be facilitated and encouraged by providing better public transportation systems.

  7. Anonymous4:26 AM

    We need to realize that the hedge fund managers sitting on exclusive, members only, mercantile clubs cut the deals which determine the future prices. Law enforcement agencies have their civic duty to regulate these activities. However, unless it is regulated globally, these hedge fund deals will only shifted from one country to the other, and don't forget that the banking system of each country where the deal is cut also benefited from these transaction(s). So there are almost no incentive to stop these hedge fund managers until the market plummeted. In the meantime minority few remain in control of the majority. It a pretty sad fact of life...
    Effort(s) to be less dependent on non oil resources will certainly help.
    Adjusting the thermostat to a warmer yet comfortable temperature, maximize recycling efforts, plant shady plants to create more oxygen and as Mr. Aroengbinang said, only turn light on if it is necessary, and use public transportation, if possible.
    Every little efforts will contribute to the global solution. Our challenge is to care.

  8. Iya nih, BBM naik jadi trasa banget bagiku yang menggunakan jasa transportasi umum *baca= angkot :)* Smuanya naik, bervariatif dari mulai Rp 500 sampe Rp 1000 hiks... sedih banget. Padahal gaji aja blum naik, tapi smua barang2 udah pada naik :( abang sayur yang tiap pagi lewat rumah juga ikut2an pula, sekarang gak ada lagi sayur yang harga Rp 1000an hua..ha..ha.. pemerintah pernah mikirin rakyat yang gak mampu bertahan akibat ini gak ya? :(
    Kalo yang kerja dan punya penghasilan tetap sih gak papa, walau ngedumel tapi tetep dijalani. Tapi bagi yang gak berpenghasilan tetap *alias naik turun*, akibat kenaikan BBM pasti terasa banget.
    Tapi kita tetap harus optimis ya jalani hidup ini, dibalik kesusahan yang kita jalani pasti ada kemudahan dibalik itu smua... cheerrrrsss.. ^o^

  9. @Anonymous: Agree, and thanks for the enlightenment.

    @Noer: ya nduk, di atas kertas memang mudah untuk mengatakan apa saja, kenyataan di lapangan memang seperti pelangi, ada banyak warna.

    Selain memang dituntut untuk berpikir keras memutar otak menyiasati kerasnya hidup, kemauan untuk saling membantu dan membagi sangatlah berarti.

  10. Your statement of zero sum principle interests me. I believe the formula is still valid and working: what you gain will, in one way or another, deprive others of that 'resources'.

    I guess, based on that principle, we need to re-learn how to use resources wisely; we need to re-learn how to share with others. If only we can make use of the excess of food wasted at wedding party (usually by guests who take in much much more than they can consume); if only we can 'restrict' ourselves to "what we really need" rather than to "what I can have" and re-distribute 'the excess', even some part of it, for others' use . . . .

  11. For traders these hard times is probably not a crisis yet, some will use the term 'downtrend', and being the most opportunist kind, these people would never hesitate to profit from the 'downtrend'.

    The bio-diesel hype also encourage producers to reduce the supply of food for the people into vast field dedicated for automobile. And with coming days the promise of 'Blue Energy' is more likely to be a ‘not so elaborated’ hoax.

    In regards to dollar crashing, I think this should be a good thing since the rate of import appears to be increasing, import will become cheaper, although it might hurt the local brands.

    If our current ministry of trade filled with capable people, they should be able to take advantage from the American and European trade wars. As we can profit from those American or European companies who can't operate in one another's territory and end up running to Indonesia. Of course this is easier said and done. We shall wait and see.

    What we need is balls from the government to acquire the more strategic industries, such as telecommunications, oil & gas, and mining. It will need a real gutsy act to follow the footsteps of Venezuela and China. This is merely a pipe dream for now.

    Right now I am more worried about Singapore (Temasek) tapping all of our communications. The sell of this critical business (If I’m not mistaken by Laksamana Sukardi and cohorts) is a major blow to our nation’s security.

    Very good writing Sir, and I like the one on Newton's first law of motion too :)
    There I was thinking it was going to be a writing about Physics (a subject failed me a couple of times in high school), quite a twist you got there at the end.

  12. Anonymous4:26 AM

    Bonjour, another anonymous who wish to add to anonymous posting. Market is created by the simplest rule of supply and demand. Supply is created because of demand, and its price will meet at its equilibrium, although because of hedge fund games, the demand as well as the supply can be artificial. The only way to calm down the market is to create or look for alternatives for depletable resources such as convertible or recyclable energy. Alternatives will create options, and more options will create less volatility on single commodity. Eventually the demand on the single commodity will plateau. However, the awareness to be less dependent to these oil, or other natural resources energy, need to come from the global market. The market will not settle while one continent decide to switch energy while the other growing economy (namely china and india) absorb the reserve. That will only shift the market. Somehow, the global citizens need to embrace the idea, develop global awareness, and control the global resources. Salut.

  13. @Ming: it's a sad thing, but it's true. It’s a paradox of life. People shall be discouraged to take advantage from other people's sufferings. It's the role of the regulatory bodies and lawmakers to deal with it, with a little pressure from the public.

    In the name of pride and also to honor guests, the more affluent people tend to spend food lavishly, whilst some people take advantage of the generosity and consume a lot more than they can digest. Yes, absolutely agree on the need to share and to control consumption, and gluttony is one of the deadly sins.

    @Rishardana: with the sharp increase in global food prices and with the bio-diesel production, the government needs to review its policy in order to further encourage farmers to increase rice production. Regardless the mechanisms of the subsidy, whether direct or through price reduction of gas used to produce fertilizer, farmers shall be able to “feel” it.

    Whilst other currencies improved their positions considerably towards US$, it seems that rupiah could not get benefit from the weak dollars, and remain weak. The credibility of central bank policy, the improvements of political stability and security, the changes in people’s purchasing behavior towards imported and local products are needed to strengthen the economy.

    @Anonymous: Thanks Mas for contributing to the discussions, appreciate it very much. Market, as you also acknowledge, no longer follows diligently to the traditional rule of supply and demand. The market apparently also listens to hedge fund managers who have different type of game of supply and demand, and hence they should as soon as possible be tamed with appropriate regulations, globally, as was also suggested by previous anonymous commenter.

    The need to use energy alternatives which are convertible or recyclable is certainly more urgent and relevant now. Just wondering why hybrid cars hasn’t been promoted and used in this region, whilst in developed countries they are on the streets for quite sometime already. The use of solar energy which is quite abundant here hasn’t been seriously explored and applied either while the technology is available.

    It’s probably difficult to stop people from enjoying life by consuming more energy and food, which come with the improvement in country’s prosperity, such as in India, China and hopefully Indonesia later. But yes, the government and the more educated global society shall work together to create awareness for the need to use energy and other natural resources more responsibly. Maybe we need to say thanks to those hedge fund managers as their irresponsible actions seem work more effectively to create that awareness in a short time.

  14. Anonymous4:42 AM

    Well, it IS still supply and demand whether it is real or artificial, you are right, it has shifted from the less traditional nature.
    Interesting!, Hybrid car is NOT yet in many places, because, the market for cars is also controlled by "car dealership cartel". Isn't it easier to continue minting money using the existing assembly lines rather than developing new ones.
    The world is controlled by various cartels, in the republic of Indonesia, there were flour monopoly, cement monopoly, then there is government legalize monopoly such as BULOG, the list can go on.
    The first world war and the second world war were initiated because of invasions, the third one, I am afraid, will be the war between the have and the have not.

  15. @Anonymous: now I'm confused whether you are the first or the second anonymous :D.

    On they hybrid car, other than what you have mentioned, apparently there are issues related with the supply of raw materials and environmental issue regarding the battery. The relatively more expensive price and the limited model available may limit the growth as well.

    On cartels, they are not only companies with similar interests, but they can also be countries with the same agendas which can be far more serious and threatening.

    Some the of cartels or legalized monopolies may not be that bad, and they are even needed to protect people.

    The challenge is how to make people, especially leaders and those who hold powers, to think beyond tribes, countries, religions, skin colors. How can we think and act based on humanity, as citizen of the world, even citizen of universe.

    On war: wars are always between the haves and the have nots, or combination of them. The struggle, however, are not always in the form of material possesions; they can be wars between those who have conscience and those who have not; those who have excessive territorial greediness and those who have not; and so forth...

  16. Anonymous12:39 AM

    One more last jump:
    Hybrid car is neither more expensive nor more hazardous environmentally. It IS the cartel.
    Model does not really matter if you have the goal to "save the world". Remember long ago, at the beginning of Ford mass production in the US, Henry Ford said "you can have any color you want, as long as it is black". The demand for a car was so high that color did not matter then, people were eager to switch from carriage to car (any color, any price).
    Can you help me by naming ONE cartel which "protect" people. I would like to know. The cartels I am aware of have good intention yet poor implementation.
    I agreed that the world need Global Governance.
    To be more blatant, third world war will be on those who control energy and those who don't. While my ego, me and myself, enjoy being correct on each debate, I hope that I am wrong about WWIII

  17. Anonymous: I haven't heard any local dealers selling hybrid car here so I could not compare prices. Apparently there are a few types of hybrid cars available.

    I agree that when people have certain big objective to achieve, such as the noble "save the world" movement, they will be willing to sacrifice, but may not be for long, as what happened with Ford.

    Behind any cartels are People, and hence cartels can be either good or bad, depending on the people who control their operations.

  18. yah mi gimana lagi lah harga minyak dunia juga naik......mau ga mau yah kita yang kena dampaknya, lagi2 kaum ekonomi lemah seperti saya yang jadi sasaran akibat kenaikan BBM...kapan yah kita bisa mengolah minyak sendiri??? jgn di bawa ke singapore mulu diolah sana yang ujung2nya kita beli minyak kita sendiri