Fuel Prices Fly, People Fall

Fuel oil (BBM) is one of the basic needs of the community. Fuel itself is sourced from petroleum. Petroleum is a natural resource that is in the earth and is formed through a long series of processes of deposition of fossils of living organisms, up to millions of years.

From this petroleum, various products that are useful in everyday life can be produced, such as fiber materials (eg rayon and nylon for clothing), household goods (eg door locks and door panels), personal care products (eg bath soap and shampoo). ), medical materials (e.g. aspirin for fever medicine), to electronic products (e.g. cell phones and computers). In addition, various kinds of fuel are also produced from petroleum, such as gasoline, diesel, kerosene, avtur, and liquified petroleum gas (LPG or elpiji). The many uses of petroleum have made many countries explore for oil, both for their own use and for resale. This makes oil an important commodity. The development of oil prices itself fluctuates according to the conditions at the time, such as wars, conflicts, revolutions, and so on. On February 24, 2022, Russia announced a full-scale invasion of Ukraine. This has made some countries, especially countries in the European Region, impose sanctions against Russia. This had an impact on the development of oil prices where the price rose after the invasion was carried out.

The Indonesian government itself provides fuel subsidies to its citizens, considering that fuel is used by the wider community, including the poor. This can be seen from the increasing number of motorized vehicle ownership in Indonesia.

Based on data from the Indonesian National Police taken from the BPS website, in 2018, the number of motorized vehicles in Indonesia reached 126,702,280 vehicles and in 2021 it reached 143,797,227 vehicles (temporary figures for 2021). When viewed from the type, it turns out that the most ownership of motorized vehicles is in the type of motorcycle vehicle where in 2018, the number of motorcycles reached 106,836,985 units of motorcycles and in 2021 the number increased by 14,372,319 to 121,209,304 units of motorcycles ( provisional figures for 2021). The number of motorcycles itself can not be separated from the cheap price of motorcycles. In addition, motorcycles seem to be a basic need, even for the poor, given their many functions.

Unfortunately, the government itself has begun to reduce fuel subsidies due to the impact of rising oil prices where subsidized fuel prices have increased. Exactly on September 3, 2022 at 13.30 WIB, the government announced an increase in fuel prices. For the type of gasoline with a grade of RON 90 (Pertalite), which previously cost Rp. 7,650 to Rp. 10,000, while for the type of diesel with a grade of CN 48, which previously cost Rp. 5,150 to Rp. 6,800. In addition to increasing subsidized fuel, the government also increased non-subsidized fuel, where gasoline with RON 92 (Pertamax) content increased the price from 12,500 rupiah to 14,500 rupiah. The price is valid at 14.30 WIB the same day. Many residents flocked to the nearest gas station to fill their vehicle tanks. Unfortunately, some of them have to swallow the bitter pill because of the snaking queues so that they get new prices. The government itself states that the burden on the state budget will be heavier if further subsidies are given. The flying price of fuel makes the people fall, considering that inflation in Indonesia itself is actually quite high. BPS itself regularly releases inflation data, where inflation in July 2022 year on year (YoY) was 4.94 percent.

This inflation is the highest inflation since October 2015. The August 2022 YoY inflation was 4.69 percent. For Jambi Province itself, it turned out to be the province with the highest inflation where inflation in July 2022 YoY was 8.55 percent and was the highest inflation for the last five years, and in August inflation YoY was 7.7 percent. Although it has decreased compared to the previous month, people who have just recovered from the impact of the Covid-19 pandemic that destroyed various economic foundations are now being chased by the ghost of inflation. How not, if the price of fuel goes up, the prices of other goods can also rise so that inflation will be even higher. High inflation will have an impact on reducing people's real income, so that people's living standards will decrease. This decline in living standards will have an impact on increasing the number of poor people where the poor will get poorer. In addition, high inflation reduces public consumption. Reduced consumption can hamper economic growth. This, of course, backfired on the government. On the one hand, if the price of fuel is raised, especially subsidized fuel, the ghost of inflation will be more evident in front of our eyes. On the other hand, if the fuel price is maintained, then the state budget finances will be increasingly burdened and it is possible to increase the amount of government debt.

Policies to Take

Therefore, in order to prevent the impact of rising oil prices from becoming more widespread and burdening the state budget, the government needs to make a new policy in the distribution of subsidized fuel. In addition, the government also needs to carry out stricter supervision regarding the use of subsidized fuel.

As we know, most of the users of subsidized fuel are rich people for the type of gasoline and vehicles for transporting plantation, forestry, and mining products for the type of diesel. Moreover, there is widespread hoarding of subsidized fuel in various areas. Consumption that is not right on target and rampant hoarding is what makes the burden of subsidies become large.

In addition, equitable development, especially infrastructure development such as roads and the provision of public transportation in various places is a way to reduce the burden of fuel subsidies. Good roads are of course more fuel efficient than roads that are damaged and potholes because drivers stop intermittently. Procurement of equitable public transportation is expected to make people switch from private vehicles, so that fuel consumption is expected to decrease so that the burden of fuel subsidies is expected to decrease.

The last way to reduce the burden of fuel subsidies is to remove fuel subsidies. So far, people have been spoiled with fuel subsidies. In fact, these subsidies can be diverted for development, such as education, health, and infrastructure so as to improve people's welfare. This method can be used when the economy is stable, inflation is controlled, and people's purchasing power is strong so that when subsidized fuel is removed, people's purchasing power is not affected. Unfortunately, people's purchasing power is now in danger of collapsing due to the increase in fuel subsidies. It seems, for this one policy, the government still has to wait. (Jambi/BPS data of Sarolangun Regency)