Oil Price Slump May Force Govt to Evaluate Fuel Subsidy

Prices for crude oil have plummeted since June and the government says if they continue to fall it will evaluate the current price of subsidized fuel. (Bloomberg photo/Dimas Ardian)

By : Rangga Prakoso | on 4:30 PM November 28, 2014
Category : News, Business, Commodities, Featured

Jakarta. Indonesia's government is keeping a close eye on tumbling global oil prices and says it will evaluate the cost of subsidized fuel if prices continue to drop.

Prices for crude oil have plummeted since June, falling from above $115 a barrel due to increasing shale output in North America and sluggish global economic growth. Crude, which is near its lowest point since Sept. 2010., was below $72 a barrel on Friday at 4.30 p.m.

Indonesia's Minister of Energy and Mineral Resources, Sudirman Said, said the government was keeping an eye on price trends.

"If the price keeps declining ... we will have an evaluation," he said on Friday.

President Joko Widodo decided to increase the price of subsidized gasoline to Rp 8,500 (70 cents) per liter and Rp 7,500 per liter for subsidized diesel earlier this month.

Previously, the fuels sold for Rp 6,500 and Rp 5,500 per liter, respectively.

Sudirman would not say when an evaluation would take place, but said BPH Migas, the state downstream oil and gas regulator, was studying global trends.

The Oil and Gas Management Reformation Team was also undertaking a study to enable more transparency around the fuel price set by the government, Sudirman said.



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