Market-Based Mechanism Causing Oil Price Fluctuations

 
Robert Sidauruk, Rofiq Hidayat
 
Recent fluctuations inoil prices havecreated uncertainty for the price of this commodity and triggering a significant increase in the inflation rate.The main reason why this situation has arisen is the implementation of market-based mechanisms by the government. As a consequence, society has not been ready for the sudden impacts of rapid changes in the oil price.
 
Economic pundit Ichsanuddin Noorsy believes that the government is taking advantage of the current legislative uncertainty. Inconsistencies between laws on the mining and energy sectors is used by the government to implement market-based mechanisms. Moreover, the Amendment to the State Budget (APBN-P) gives the government full authority to increase the oil price.
 
“The government has the control to determine oil prices,”said Mr. Noorsyon Wednesday.
 
Commenting further on the price fluctuations, Senator Siska Marleni(Commission IV) said that there should be a time lapse before the government increases the oil price to ensure the people are ready for the policy. The rapid changes to oil prices have impaired supply and demand stability in the market, which affects commodity prices.
 
“The hike of price of oil triggers an increase in the price of goods and services as well as the inflation rate,” said Mrs. Marleni.
 
Further, Mrs. Marleni is also putting focus on the market-based mechanisms implemented by the government to determine oil prices. Mrs. Marleni reminds the government that it must apply fair economic mechanisms as is required under the constitution.
 
“The Constitutional Court has declared national oil cannot be let to market mechanisms” said Mrs. Marleni.
 
Consumers Disadvantaged
Sudaryatmo, an Executive Officer at the Indonesian Consumer Foundation, said that it is unfair if the government expects society to quickly adapt to fluctuations. In addition, the government is failingto prepare necessary policies to reduce the impact of such fluctuation.
 
“The oil price is set through market mechanisms without rational and comprehensive justification,” said Mr. Sudaryatmo.
 
Mr. Sudaryatmo further highlightsthree main problems withPresident Jokowi’s administration. First, the hike in oil prices has triggered an increase in commodity prices. Second, the government has failed to realize fair tariffs for public transport. Third, the government should not revoke the subsidy for all energy sectors at once.
 
“The government does not have a feasible and long-term scheme for public transport tariffs,” added Mr. Sudaryatmo
 
(hot/kc)
 
Robert Sidauruk, Rofiq Hidayat
 
Recent fluctuations inoil prices havecreated uncertainty for the price of this commodity and triggering a significant increase in the inflation rate.The main reason why this situation has arisen is the implementation of market-based mechanisms by the government. As a consequence, society has not been ready for the sudden impacts of rapid changes in the oil price.
 
Economic pundit Ichsanuddin Noorsy believes that the government is taking advantage of the current legislative uncertainty. Inconsistencies between laws on the mining and energy sectors is used by the government to implement market-based mechanisms. Moreover, the Amendment to the State Budget (APBN-P) gives the government full authority to increase the oil price.
 
“The government has the control to determine oil prices,”said Mr. Noorsyon Wednesday.
 
Commenting further on the price fluctuations, Senator Siska Marleni(Commission IV) said that there should be a time lapse before the government increases the oil price to ensure the people are ready for the policy. The rapid changes to oil prices have impaired supply and demand stability in the market, which affects commodity prices.
 
“The hike of price of oil triggers an increase in the price of goods and services as well as the inflation rate,” said Mrs. Marleni.
 
Further, Mrs. Marleni is also putting focus on the market-based mechanisms implemented by the government to determine oil prices. Mrs. Marleni reminds the government that it must apply fair economic mechanisms as is required under the constitution.
 
“The Constitutional Court has declared national oil cannot be let to market mechanisms” said Mrs. Marleni.
 
Consumers Disadvantaged
Sudaryatmo, an Executive Officer at the Indonesian Consumer Foundation, said that it is unfair if the government expects society to quickly adapt to fluctuations. In addition, the government is failingto prepare necessary policies to reduce the impact of such fluctuation.
 
“The oil price is set through market mechanisms without rational and comprehensive justification,” said Mr. Sudaryatmo.
 
Mr. Sudaryatmo further highlightsthree main problems withPresident Jokowi’s administration. First, the hike in oil prices has triggered an increase in commodity prices. Second, the government has failed to realize fair tariffs for public transport. Third, the government should not revoke the subsidy for all energy sectors at once.
 
“The government does not have a feasible and long-term scheme for public transport tariffs,” added Mr. Sudaryatmo
 
(hot/kc)
2026 Hak Cipta Milik Hukumonline.com
Cookies Info