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Oil prices, as usual.

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It’s sometimes funny to read some of the news article about the declining oil prices. One latest one in a major English daily said that with the oil prices declining, some of the oil companies in Kuala Lumpur may face pressure to move out. First question, why would they move out because of low oil prices? Is it because of lower profits, therefore they could not sustain their operations and thus have to move out of Kuala Lumpur? Or moving to smaller offices? Moving to other countries? Closing down? Actually the article did not say but I seriously do not think any oil company would be moving in and out of offices with the movement of the oil price. I have personally set up a new office before. Even though it is just a 1,600sf office and with majority of everything reused, it is still very expensive. I have been to a few oil based companies before. Their offices always look impressive. For them to move such offices, would be crazy. Of course the agent would be happy and so would the renovation company. Oh yeah, shutting down today and reopening later when oil prices are up again? 🙂

These days, when the stock market is down, they said it’s because of oil price going down. When Ringgit is down, they say it’s because oil prices are down. AUD$ is also sliding down, it is even lower than November when I exchanged RM into AUD$ to travel to Perth. Until today, I did not change back because AUD$ has gone down slightly versus RM. I think this must also be due to the oil price. Oh yeah, Japanese Yen is still weak versus RM. I think this must be due oil price too. Euro is on a 9 year low versus US$. Must be oil related too. Haha. I hope you get what I mean by now. The current oil price CANNOT be affecting so many currencies and yet US$ is up because oil price is down? Ok, perhaps that’s because the US is expected to have a GDP growth for 2014 which exceeds expectations?

On the radio, it was announced that the mandarin oranges would be 10-15% more expensive this year because of many reasons. I thought oil prices are down, therefore costs of doing everything should be down. From transportation to fertilisers (yes oil is needed) and to electricity use (yes, its’ either hydro, nuclear or oil). So, why are the prices up? Have you ever gone to supermarkets to buy Mandarin oranges on the first day of Chinese New Year? Yes, the prices are down at least 20-30%. Have you ever bought mandarin oranges many days after Chinese New Year? Have you compared the mandarin orange price between different supermarkets? Yes, it can be up to 10% different at different times! Did costs come down suddenly? Nope, it’s more of realising the demand and supply equation and it went back to equilibrium. Oh yeah, Chinese Yuan has gone up versus RM, is this the reason? It has gone up by 4.5% versus 2014. Hmm…. perhaps the adjustment should have been 4-5% instead? Then again, the costs of doing everything has gone down, surely this 4-5% should have been offset by it?

When we have no answers, it’s okay, blaming is easier than researching and explaining. Happy New Year.

written on 6 Jan 2015

Next suggested article: OPEC vs US oil producers. Who’s going under first?

 

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