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Sunday, June 08, 2008

Governments Subsidizing Gas

Tee Bee,

Nations ARE cutting back on subsidies. here is an International Herald Tribune article talking about India and Malaysia reducing the amount of subsidization. Government's can not afford to do it forever:
The national oil company, Petronas, has subsidized the natural gas at a cumulative loss since 1997 of more than $19 billion. Much of the gas was from Malaysian offshore wells, but some was bought from Vietnam and Indonesia at market prices and then sold locally for one-quarter of that price, according to Hassan Marican, president and chief executive of Petronas.

Back in the days of the Southeast Asian currency crisis the Filipino government dropped its support of its currency, why? Because it became too expensive and the Peso went from about 25 to the dollar to about 50 to the dollar in a short amount of time.