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Pertamax Price Increase is a Form of Adaptation to Respond to Rising World Oil Prices

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By: Bayu Pramudhita)*

The increase in the price of Pertamax is a form of adaptation of the Government in responding to the increase in global oil prices. The public was also asked to be wise in responding to the Pertamax price adjustment.

Pertamax has increased its price from 9,000 to 12,500 per liter. This increase was officially announced by the government since April 1, 2022. When the price of fuel rose, of course there were various responses from the public because they were shocked, and previously they were even exposed to rumors that it had increased to 16,000 rupiah per liter.

Head of BIN Gen. Pol (Ret.) Budi Gunawan stated that the government chose to adapt to the world oil price of more than 100 US dollars. Adaptation is the best way to deal with external increases in fuel prices. In the adaptation decision-making process, the government considers the economic situation of the community. Therefore, the increase is the type of Pertamax fuel.

Pertamax is increased in price because the people who use it are cars or sport motorbikes and other luxury vehicles. Meanwhile, the price of Pertalite is still stable because it is subsidized by the government. Mitigation on Pertalite is carried out because this fuel is mostly used by the lower middle class.

Moreover, the government did not increase the price of Pertamax in accordance with its economic value, which is 16,000 rupiah per liter. Compare this with other countries where the fuel price is 20,000-30,000 per liter if converted into rupiah. The public is asked to understand it because this increase follows the increase in world oil prices. If it is not raised it will be unhealthy for the country’s economy.

The world oil price has indeed gone up because previously it was only around US$65, while now it is already at US$100 per barrel. This increase was triggered by the conflict between Russia and Ukraine. Meanwhile, Russia is one of the world’s largest oil-producing countries, so when there is a war, it will greatly affect global fuel prices.

The government decided to adapt by adjusting fuel prices to world oil prices. The option for mitigation was not chosen because if there were too many subsidies, it would have a negative effect on the state’s financial condition. The subsidy will be borne by the government even though the country’s condition is in a bit of a slump due to the effects of the Corona pandemic.

When the state’s financial condition is not 100% healthy, the subsidy will be more burdensome and as a result a minus, even a recession, because the state’s money is burdened by the subsidy. When state finances object, do not increase debt because it will further disrupt Indonesia’s financial condition.

Subsidies look good at the beginning but miserable in the end because they add to the national debt. We must learn from the experience of decades ago, when in the new era everything was subsidized by the government, including the price of fuel. However, when a monetary crisis occurs, the country’s debt in dollars is worth many times, so it has to be half-dead when it comes to paying it off.

The public is asked to understand that the adaptation carried out by the government is for the sake of Indonesia’s future and to save the country from the accumulated debt. If mitigation continues, it will be unhealthy for the economy in this country.

The increase in fuel prices is certainly surprising, but we must understand that this phenomenon occurs as a result of rising world oil prices. After all, it was Pertamax that went up, not Pertalite. The public is also expected to be wise in responding to this decision and maintain a conducive situation during Ramadan.

)* The author is a contributor to the Nusa Bangsa Institute

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