How can the prime minister expects the r akyat to understand the reasons for the fuel price hike when a number of things don't make sense to us. Unless I missed out on certain issues in macro- economics, this is how I see our country as an oil producing country.

For many years, the government has been implanting in our minds that they have been subsidising the rakyat on fuel so that we would not be burdened by such costs. Now, if we are an oil-producing and oil-exporting country, why should there be such a thing as subsidy?

In fact, by exporting oil, logically speaking, we are enjoying revenue from the oil sold to the world market. Malaysia's export is at 230,200 barrels per day from 2004 to 2007. In 2008, there was a big jump in our exports at 611,200 barrels per day

Since the mid-1980s, the inflation-adjusted price of a barrel of crude oil on NyMex had been generally under US$25/barrel and it was still at this level in September 2003. Having passed US$40, then US$50 during 2004, a series of events led the price to exceed US$60 by Aug 11, 2005, briefly exceed US$75 in the middle of 2006, falling back to US$60/barrel in the early part of 2007, then rising steeply, reaching US$92/barrel by October 2007 and US$99.29/barrel for December futures in New York on Nov 21, 2007.

Throughout the beginning of 2008, oil hit several new (inflation-adjusted) record highs. On Feb 29, 2008, oil prices peaked at US$103.05 per barrel, and reached US$110.20 on March 12, 2008, the sixth record in seven trading days. The most recent price per barrel maximum of US$138.83 was reached on June 6, 2008.

So looking from the above, Malaysia made hefty sales this year which should overfill the coffers of Petronas.

But what about ‘subsidy’? If I were to understand the term correctly, it would mean that the government absorbs part of a purchase cost with the other part borne by the rakyat , and this can only come about when we import (not export) oil. Let us say we import oil at RM4/litre. The government then decidesto defray part of the purchase cost, say RM1.92, to the rakyat while they absorb the rest, ie, RM2.08/litre.

Only then can we say that the government is subsidising the rakyat at RM2.08/litre. Since we did not import (meaning no purchase cost), then where does the ‘subsidy’ come in?

From the looks of it, the government is profiting both ways, a ‘double entry’ of sorts. One from the increase in oil prices from the world market and the other, from the rakyat who now have to pay the difference of RM0.78/litre every time they fill up their tanks.

By right, the money made from the oil sales should go back to the rakyat to ease their burden but instead, the rakyat is being treated otherwise. If other oil-producing countries can retail their oil at less than a ringgit per litre, why can't we?

Incidentally, what happened to the RM5 billion that we saved after the last oil price hike? We were told that it would go towards improving public transportation and related infrastructure, but we have yet to see that happening and that was almost a year ago.

Umno has been living in extravagance all these years and its time for them to pull back. I have a few suggestions here:

1. The prime minister should move back to the old Sri Perdana residence so that he can be near the people (to feel their pain) instead of hiding away in that no man's land Putrajaya. His Majesty, the Yang di-Pertuan Agong needs a palace, the PM doesn't. The Putrajaya residence can be auctioned off with the proceedings handed back to the rakyat .

2. All ministers are now required to fly AirAsia or Firefly. If they need to fly MAS, make sure that they travel Economy. If a chief minister of a state (Penang) can do it, why can't the prime minister and his cabinet members too?.

3. All overseas study trips are to be curtailed.

4. Petronas to be made accountable to parliament. An international auditor must be appointed to vet through the books of Petronas followed by a public declaration in the various media.

5. All cars used by leaders must be relegated to a Proton Wira. The current guzzlers in use must be put up for tender sales with the proceeds going back to the rakyat .

Change our lifestyle? Let's start with you, Mr Prime Minister. What happened to leadership by example?