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KOMPAS.com – Russian invasion of Ukraine have a significant impact on oil prices raw world.
As of Saturday (5/3/2022), Brent oil was priced at US$118.11 per barrel, up 6.93 percent from the previous day.
Meanwhile, West Texas Intermediate (WTI) oil traded at 115.68 percent, up 7.44 percent.
Also read: History of the Russia Vs Ukraine Conflict
Price increase world crude oil This certainly has an impact on countries that rely on imports such as Indonesia.
In response to this, Gadjah Mada University (UGM) energy economy observer Fahmy Radhi said the increase in energy world oil prices this is so amazing.
According to him, the price of oil will be “crazy” when the war escalates.
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The increase in oil prices is a burden on the state budget
For Indonesia, Fahmy said this increase would further burden the State Revenue and Expenditure Budget (APBN).
“The higher the increase in oil prices, the heavier the burden on the state budget. The burden of the state budget is to provide compensation when Pertamina sells fuel below the economic price,” Fahmy told Kompas.com, Saturday (5/3/2022).
He explained that the government also faces a dilemma in addressing this issue.
Also read: List of Sanctions Imposed on Russia for Invasion of Ukraine, What Are?
On the one hand, the government’s reluctance to raise fuel prices will further burden the state budget.
On the other hand, an increase in fuel prices has the potential to increase inflation.
“If you then have to increase fuel prices simultaneously, it will increase inflation and cause prices for basic needs to rise and will worsen purchasing power,” he explained.
Therefore, he considers the government’s decision to be selective to increase fuel prices, namely only for non-subsidized fuels (Pertamax Turbo, Pertamax Dex and Dexlite).
Anticipate shortage or oil crisis
A long line of cars at a Birmingham gas station on Tuesday (28/9/2021) due to the UK’s fuel crisis.-
Apart from that, Fahmy explained that the government must also be prepared to anticipate a shortage or an oil crisis.
“I think the potential is quite large, because fuel in Indonesia is very dependent on imports. Meanwhile, the oil processed in our refineries is very small, at most 10 percent,” he said.
To anticipate this, Fahmy advised the government to increase the capacity of the refinery, so that it can process more crude oil.
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In addition, the government can also take advantage of domestically produced crude oil which was previously intended for export.
“We actually have export oil. So the crude oil produced in Indonesia is processed in our own refineries, the condition is that the refinery capacity must be enlarged,” he said.
“If it can be enlarged, this will reduce dependence on imported BBM from abroad, so that if there is a shortage of world supply, Indonesia will have its own stock which can protect against shortages,” he added.
You don’t have to build new ones, Fahmy said the government could enlarge the existing refineries.
“That may be a short-term thing that can be done. Don’t let there be another fire,” he concluded.
Also read: Complete list of Pertamax Turbo, Dexlite, and Pertamina Dex prices that are going up starting today
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