Petrol also known as gasoline, is denoted as the light fuel oil which is obtained by the process of fractional distillation of petroleum (Oxford Dictionary, 2013). Petrol is abbreviated from the word “petroleum”, which is derived from the Greek word ‘petros’ and oleum (Health Protection Agencies, 2011). It started to be used as product name by a London company, Carless, Capel and Leonard at the end of the 19th century. Nowadays, it becomes an indispensable part of our life, which is widely used as the fuel in vehicles and petrol powered engines. It can also be used as the power generator of electricity. However, due to the strong oil demand from countries all over the world, even Malaysia as an oil-exporter country, for over the 20th century, fuel price has been fluctuating ever since and increasing from day to day. Back to the day before 1990’s, a litre of fuel costs us RM0.89, and since, it started increasing to RM1.10. For the year 2008, a litre of petrol is increased by 78 cents from RM1.92, which then costs us RM2.70 (The Star, 2008). Today, a litre of RON97, which is high-octane premium unleaded petrol, is retailed at RM2.85 per litre, whereas RON95, which is lower octane unleaded petrol, is retailed at RM2.10. The increase of price on fuel pump at around 20 cents per litre can help the government to save about RM1.1 billion this year, and even RM3.3 billion every year in future(Ramasamy, M. and Pookoon, N.,2013).
Although some might think that government should increase the petrol prices as a channel to develop a country economically; however, it gives many negative impacts in other ways. Thus, the purpose of this paper is to point out the consequences of the increase of petrol prices on individuals, society, and a country itself.
First and foremost, the increase of petrol prices can cause inflation. According to Overseas Development Institute, since 2007, many developing countries face strong inflation pressure because of their large consumption of food and fuel products due to increase of petrol prices (2012). This is because increase in petrol prices gives effects on the costs of production, such as oil-derived fertiliser and freight costs. Suppliers and vendors will take the chance to increase the price sold of food. Thus, people have to pay more for the same products. According to International Monetary Fund, there is an increase for almost 70 percent of 2007 headline inflation in food price in emerging economies (2013). There can also increase the competition between food industries as the increase in oil prices as agriculture can manufacturing can lower the budget spent on petrol to replace oil with biofuels that use crops such as cereals and sugar cane.
Furthermore, the increase in petrol price can give effects on transportation fees. According to The Star Online, there is about 15% hike on transportation fees by those lorry owners (2013). Consequently, everything can be more costly when there is an increase on transportation...