Leveraging on the fuel price hike


THE recent hike in fuel prices has no doubt resulted in many of us either holding our heads or face-palming ourselves in disbelief.

Earlier this month, the prices of RON95 petrol and diesel were raised by 20 sen per litre to RM2.30 and RM2.20 respectively. Based on estimates, the fuel hike is projected to bring about savings of some RM3.3bil per year for the Government.

For the average motorist, it means higher fuel cost for each litre of fuel used.

Become more fuel efficient

To everyone, the occurrence of a fuel price hike is never a good thing. A lot of goods and services are sensitive to the cost of energy. But for those looking to buy a car, the timing could not be better.

“As the Government gradually reduces fuel subsidies, petrol and diesel prices are only going to keep going up. This will result in more demand for fuel-efficient cars,” says one industry observer., adding that the recent launch of the Perodua Axia and Proton Iriz could not be more timely.

According to reports, the recently launched Perodua Axia has received over 20,000 orders since bookings were opened for the vehicle on Aug 15. The vehicle boasts fuel consumption of 21.6km per litre and 20.1km per litre (manual and automatic transmissions respectively).

Powered by a 1-litre aluminium engine, it is priced from RM24,600 to RM42,530 (Peninsular Malaysia).

The Iriz, meanwhile, is available with 1.3-litre and 1.6-litre engines and has received 17,000 bookings prior to its launch on Sept 25, according to reports.

Retailing from RM42,438 and RM62,888, the Iriz has a claimed fuel economy of 6.6 litres per 100km and 7.4 litres per 100km for the manual and automatic transmissions respectively.

Earlier this week, Malaysian Automotive Association president Datuk Aishah Ahmad told StarBiz that the Axia and Iriz will help boost vehicle sales this year, given the strong bookings registered so far.

There has been a rise in demand for fuel-efficient vehicles when the price of fuel at the pump goes up, especially a steep hike.

In 2008, during the height of the global financial crisis, Perodua achieved the most bookings in its 15-year history in July that year - 22,000 units - with 17,400 registered sales, when petrol price was raised by 78 sen to RM2.70 per litre and diesel price by RM1 to RM2.58 per litre in June 2008.

Shopping from home

Citing consumer-centric information portal BIGinsight, Forbes, in its article “The Economic Benefit of Rising Gas Prices” identified a change in consumer purchasing patterns as a result of increasing gas prices.

“Consumers are more price-conscious as well as more cautious about wasting fuel to run all over town to different stores and malls. Discount stores offer more fashion-forward merchandise for price-sensitive consumers, regardless of the household income.

“Rising gas prices are inevitable. Consumers have a wide variety of ways to save on other consumer purchases. Shopping online saves consumers’ gas and time.”

To lure customers, Forbes notes that Internet retailers also promoted convenience, access to a broader and deeper variety of merchandise and brands.

“Coupons, promotions and discounts are also drawing consumers to websites; enticing consumers to complete the purchasing process. In the event that gas prices decline, internet retailers are hoping techniques instilled to lure consumers to the website will result in loyal shopping patterns.”

Creation of new technologies

According to personal finance and investment website, Investopedia, higher fuel prices can give rise to new ideas and technologies.

With higher oil prices, though, suddenly a lot of new ideas get a hearing. Increased fuel mileage for passenger cars seemed pointlessly expensive in the US prior the 1970s energy crisis, and it likewise seems probable that hybrids today owe any acceptance outside of the environmental crowd to the high price of gasoline.

“Along similar lines, the path towards viable mass market all-electric cars is predicated on persistently high oil prices.”

The website notes that it’s not just in the category of passenger vehicles where high oil prices lead to innovation.

“Quite a lot of plastics and other synthetic materials are derived from oil and higher prices ripple through the economy. With high oil prices, then, comes increased interest and research and development into non-oil alternative feedstocks for these materials.

“This process has a lot of fringe benefits for the economy as a whole. Research into oil substitutes creates jobs for scientists and engineers. When successful, these efforts also result in product alternatives that allow consumers to spend less of their income on energy.”


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