“Two Tsunami” of Unavailability of Oil Imports for Indonesia which Reach a Million Barrels Per Day Potentially to deteriorate the National Economic

“Two Tsunami” of Unavailability of Oil Imports for Indonesia which Reach a Million Barrels Per Day Potentially to deteriorate the National Economic (increasing fuel price should be Postponed)

Government policy to increase the price of oil in the situation of the Iran threat is a big mistake. There are three reasons to support the above statement,

The first reason; Iran war could break at any time. It potentially undermining Indonesia's economy which will be more devastating than the impact of increasing the fuel price. Since approximately 35-40 million barrels oil per day (bopd) of the world's oil traded will disappear from the world market of about 28 million barrels ( Iran's production of 3.5 million bopd, plus the world's oil pass through the straits of Hormuz are 19 million bopd and 5 million bopd which will be detained by oil producer countries due to the psychological effects of the war and national security considerations). Its mean that more than 2/3 of oil traded disappear from the market and is predicted that several countries will potentially collapse. Meanwhile, Indonesia it self, imports 2/3 its oil needs, which is about 1 million bopd of the total national needs 1.4 million bopd, will not automatically gets the oil. Alternative energy for Indonesia is not yet able to replace the needs.

The second reason; if the Iran war is not be the case. Within 5 years from now, oil imports would not be available. This will happen because of the growing consumption of oil exporting countries and oil importing countries will compete, especially the two largest importers, such as the U.S. and China. They imports about 15 million bopd and 7 million bopd respectively. So its total about 22 million bopd which is almost 2/3 of total world oil trade. On the other hand, analysts state that 90 % of the world's oil fields are declining their’s production. Fields are already present and newly discovered will also decrease the production of about 2 % per year or 20 % for 10 years. On the other hand, world oil consumption rose 2 % per year or 20 % for 10 years, it means that in 10 years to come, with a rise in consumption followed by a decline in production will produce a gap of oil shortages about 40 million bopd. In summary, the world's oil imports will no longer exist, because nowadays it traded only about 35-40 million bopd. However, this does not happen in 10 years to come, instead, it can be occured more quickly. The disaster can be happened in 4 to 5 years from now.

Indonesia only have time to straighten up in the next 5 years prior to the scarcity of oil in the world. It could be said that now Indonesia has the energy condition in “emergency”, if it is agreed, then the country since now have had to perform “emergency actions” in order to escape from dependence on oil within 5 years.

The third reason; without raising the fuel prices. the country, indonesia, actually still have two alternatives to resolve the amount of fuel subsidies. It is either by raising taxes on to ultra-rich people or issuing government bond, or combination of them thereof the budget deficit is not always charged to people by rising fuel prices which will strangle most of the people.

It is common knowledge that economic growth in the world and in many other countries enjoyed by upper-middle economic classes while the majority of citizens do not enjoy it. As an illustration, 150 people of Indonesia's richest have total assets of nearly USD 107 billion which is similar to USD 14 % GDP of Indonesia. In America, occupy Wall Street is due to 1 % of ultra-rich Americans dominate 50 % of U.S. GDP. Obama's proposed to increase of 5 % for the ultra-rich from 34 % to 39%. Actually, there is still possibility for Indonesia’s government to raise taxes for the ultra-rich.

Currently, the government’s income of tax revenues is about 70 % of the total budget, which is nearly USD 200 billion, i.e USD 140 billion. Indonesia's current debt position is approximately 20 % of GDP, while countries in the world, for example; United States, it has a central government debt more less 100 % of GDP, the debt of financial institutions around 80 % of GDP, private debt around 80 % GDP, and the debt the state around 80 % of GDP, which altogether about 340 % of GDP. Indonesia, including the low-debt countries, approximately 20-25 % of GDP. it can take a step by issuing government bonds to resolve recent condition.

its said that Indonesia has deficit for the fuel subsidy of about USD 20 billion, while Indonesia's debt of about 20-25% of GDP, which is about USD 180 billion. Indonesia's GDP is nearly USD 1 trillion. So if we owe another USD 20 billion, the total debt to about USD 200 billion or 28 % of GDP, there is still opportunity to issue the government bond.

So with these two instruments, raising taxes for the ultra-rich Indonesia and issuing the government bond can avoid the fuel price increases. So, the potential for violence can be mitigated. As government prepare for a year to attain the conversion from oil to CNG and saving energy actions as well as other government’s expenditure so then reliance on imported oil can be minimized.

Not to mention the Iran case, IMF managing director, Christine Lagarde, dated March 25, 2012, says that broke down on Iran raising oil prices by 30 % or exceed USD 160 per barrel. The author believes that if Iran war broke out, oil prices must be raised even higher to exceed USD 250 per barrel and a more tragic condition is the oil not available in the world.

People can be conditioned to be mentally prepared to face the two major “tsunami” impact on the Iran war and the impact of non-availability of imported oil in the next five years.

Based on interview with,Effendi Siradjuddin, Pengamat Perminyakan, Penulis Buku; “Memerangi Sindrom Negara Gagal”, 2008 dan buku “The End of Trias Politica”, How State and the World Should Work, terbit April 2012.

was translated by Muhamad Doris