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Supporting the Government to Maintain Stable Cooking Oil Stocks and Prices

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By: Rahmat Siregar)*

The price of premium cooking oil has returned to its original state because the government has revoked the subsidy. The public also supports the Government’s efforts to maintain stock and cooking oil prices, which are expected to find a new balance point soon.

Several weeks ago, people complained that premium cooking oil was scarce in the market. Even if there is, the price goes up and does not match the HET (highest retail price) set by the government. Finally, the government reluctantly removed the premium cooking oil subsidy so that the price returned to its original state, and only then there was a supply that came out on the market.

The price of cooking oil is now in accordance with the economic value and has an impact on the abundance of these products. In the end, people can easily buy them in traditional markets or minimarkets. They are willing to buy it because cooking oil is one of the basic necessities (nine staples) needed by every family.

The head of the State Intelligence Agency (BIN) General Pol (Purn) Budi Gunawan stated that the government’s new policy needed time to unravel the confusion over the distribution of cooking oil. In addition to the time factor, it also requires consistency and supervision in the market. In the early stages there was a slight price increase when the distribution was restored but after that there would be an equilibrium (balance point) so that the price of oil returned to normal.

This balance is in accordance with the economic law of supply and demand where when the demand is high but the goods are scarce, the price of the goods will rise. However, once the goods are plentiful and market demand is normal, the price will drop.

In a sense, currently we are still in the process of normalizing the distribution of cooking oil as an effort to maintain stock stability in the market. When oil has flooded minimarkets and supermarkets (with various brands) then the price can slowly go down.

We just have to wait until cooking oil stocks flood the market again and demand returns to normal, so the price can slowly go down. People are asked to patiently wait until that time happens.

The increase in the price of cooking oil became the talk of the public because they were shocked. Oke Nurwan, Director General of Domestic Trade at the Ministry of Trade, explained that there were several factors that caused price increases, “First, the high world oil price. Second, the lack of smooth distribution of oil via sea due to the pandemic. While the third, the yield of palm oil (as raw material for cooking oil) is less because it has entered the rainy season.”

In a sense, the increase in cooking oil prices is not because the government is unjust, but because world oil prices are indeed rising. Inevitably the cooking oil subsidy is revoked and the price of oil is in accordance with the economic value.

If people find it difficult to buy premium cooking oil, they can switch to bulk oil, which still gets subsidies from the government, so the price is still 14,000 rupiah per liter. This type of oil is readily available in traditional markets.

With the HET of bulk oil which is relatively cheap, it will balance supply and increase people’s choices. We can temporarily switch to bulk oil because the price is much more affordable while the quality is also quite good. Don’t be afraid to use bulk cooking oil because the results are just as good.

The public supports the government’s efforts to maintain stability in cooking oil stocks and prices. There is nothing wrong with removing the subsidy as long as the distribution returns to normal so that oil is no longer scarce in the market. There is already bulk cooking oil which is cheap to reach all people.

)* The author is a contributor to Pertiwi Institute

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