Is the following a classic example of how logic works slightly differently around these parts or perhaps proof that I have little to no understanding of economics?
Fellow blogger Malum Nalu posted a story yesterday about how the fuel prices in PNG have been dropping the past six months:
“Fuel prices drop for sixth successive month“
Here is an excerpt: (Click on the above link for the full story)
The New Year has begun with good news for the nation’s fuel consumers. Retail prices have continued to fall in the wake of the international economic crisis and are now at their lowest levels in twelve months. The falls apply across the board to all major fuels, gasoline, diesel, kerosene and aviation fuel. InterOil President Bill Jasper said it is the sixth successive month that fuel prices have dropped in Papua New Guinea. “The cost of crude oil has been in freefall since last July, dragging down the retail price of refined product with it”. “The January fuel prices are evidence of the profound effect that international forces have on our domestic market”…
Logic suggests to me that the current world financial crisis that oil prices would be going up (and up… and up…).
But not so in PNG!
Does western logic break down in Papua New Guinea or is my knowledge of macro-economics a laughing concern?
Let me take you back to a previous post and remind you about the 10 Paradoxes of Papua New Guinea:
1. You can trust a man with your life but not with 50 bucks.
2. Lovers will not hold hands in public but good mates do.
3. Order and chaos are one and the same.
4. A person’s wealth is measured by what they give away rather than what they accumulate.
5. There’s no such thing as PMV timetables but as a rule of thumb one does not have to wait longer than a few minutes for a passing bus.
6. There’s no such thing as a free gift even though the locals give freely.
7. It’s much easier to raise money for the dead than what it is for the living.
8. Papua New Guineans will patiently hang around for hours but when it comes to queues they lose all sense of courtesy.
9. It’s totally acceptable for a man to have close body contact with a young lass whilst riding on the back of a PMV other times it’s probably best not to have eye contact.
10. There is no word for paradox in Tok Pisin!
NB: I strongly suspect that my limited knowledge of macro-economics coupled with a lack of insight into the current global financial meltdown fails to understand the reason behind the current drop in PNG oil prices rather than the law of the “buck” working differently around these parts.
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Rob,
As ww economic growth slows so does the demand for oil. In fact, much of the price rises over the last 6-18 months was often due to speculators pushing the oil price beyond to what it should have been…
In July 08, oil was $ 148 US (or thereabouts)… In Jan 09, its is hovering around $ 42 US…
You would expect price of petrol at the pump to drop by around 60+ % !!!
It is all about demand… (China, India) and the perception of this increase in demand …
Well, that’s my 2c’s worth…
John
Bro,
Does this then mean that the amount of oil consumed around the world has dropped since the “crash”.
Or… someone(s)/somewhere(s) is(are) artificially manipulating the price of oil to somehow have an impact on the demand. In other words as price of oil drops does the demand then rise?
Over to you (or someone else)…
R
well fuel prices have dropped sharply in the UK along with many other costs as people spend less, fearing for their futures as unemployment rises and companies tighten their belts rather than risk going to the wall as a couple of major manufacturers have done.
So, no, I don’t think this is an example of a different logic system to yours. Rather, a good example of how in tune you are to your reactions toward news in PNG perhaps.
I don’t know why fuel prices have dropped so dramatically….I don’t really care as long as they remain low. A couple of months ago the average price per litre of petrol was $1.50 in Western Australia. Today I bought petrol at $95.8cents per litre
I read an article somewhere thanks to Mr Google – and the comment was that oil consumption has dropped by less than 10 %… The main problem with oil price, apart from increase in demand and a perception of dwindling supplies, was the ‘hedge’ funds… not quiet sure, but I expect there was a lot of purchasing of future oil stocks… and as long as oil price was rising, this was a good bet for the hedge funds….
… but with all that – the rising market had to come to an end, and POP it did !!!!
A bit of wisdom : “to know the future, all we really have to do is learn about the past”.
John