Show off to buy less

Earth hour is a very interesting experiment. It turn the bandwagon effect upside down.

The standard bandwagon effect is to display consumption so peer pressure lead more people to consume similar item. It worked especially well on luxury and branded items.

But enviromental concern could also be treated as luxurious consumption item and peer pressure could be used in many ways. Slimming down and going to the gym is one example where it work to reduce consumption of high-fat substance.

The number is quite encouraging. Just in Chicago area it save 100 megawats of electricity (click here). Anyone has corresponding number for Indonesia?

It's about increasing demand as well...

As incomes rise, economies use more energy for transport, heating and cooling and producing goods and services. A broad cross section of nearly 180 countries shows that doubling per capita income more than doubles per capita oil consumption (Chart 2). How much each country contributes to increases in global energy demand depends on its population and rate of income growth. Big nations moving quickly up the income ladder have huge implications for oil markets.

Crude Awakening: Behind the Surge in Oil Prices by Economist's View Blog

I am sick and tired with so many Indonesian experts and commentators that saying the recent fuel price hike should be canceled because Pertamina (Indonesia Oil Company) must be able to increase their oil production to meet domestic demand. Despite of inefficiency within Pertamina production strategy, does anybody aware that the 4th population rank in the world to some extent contribute to increasing demand of oil as well - at least at national level?

If we believe that economic activities in Indonesia still on going progress (in other words, Indonesian economy still growing), then it is quite certain that demand for energy also getting higher and higher. In addition to that fact, higher population also adding up the potential. This is the simple proof that pricing policy in oil sectors become ineffective. Why? Because higher demand for oil with wider price differential i.e. market price vis-à-vis subsidy price will creating potential greater market disequilibrium. In short, higher demand with great price differentiation will always distorting the market that cause the price constantly rising.

Then people will questioning, what should we do with such condition? There are only three solution in medium and long term. First, consume energy in efficient way. Second, please support and demand alternative energy, especially the renewable one. Third, keep consuming energy in efficient way no matter what energy source we consumed.

Ready for higher fuel price?

Scarcity causes higher prices, and that's a good thing. Higher gas prices lead to conservation on the part of consumers, exploration on the part of producers, and innovation on the part of alternative energy entrepreneurs.

… Price controls, gas rationing, windfall profit taxes, gas tax holidays … are all bad policies that may make you (and politicians) happier in the short run but will make everyone miserable in the long run. Your solution to high gas prices is to adapt"

"Who's to blame for $4 gas" Environmental Economics

I wish that Indonesian start to realize how long they enjoyed BBM subsidy and what is the impact of those enjoyment. For more than 30 years, low price of BBM - due to subsidy, not only affecting national budget but also over-consumption behavior, under-production strategy, lack innovation on energy efficiency. And, another but very long run impact of such low price of BBM is our environmental quality degradation. It happened not only by giving up our natural resources - i.e. oil stock - simply for consumption, but also pollution externality and other degraded environmental depletion.

Now, you may tell me that I do not care for poor people?

I can answer you the same way you rejected increasing price of BBM, "There are still another way". There are still a lot of ways to help the poor. Keeping price of BBM low only give the poor pain killer, but not panacea. When you force us to swollen the pill of "BBM subsidy", then whether you realize it or not, you close the door for another way to help the poor.

(tak) merdeka dari kelangkaan

Gelegar kemerdekaan baru saja kita nikmati. Perayaan dimana-mana sungguh menyiratkan sebuah bangsa dan sedang bergembira dan berbahagia menikmati arti kemerdekaan. Pun kemerdekaan juga mempunyai arti yang berbeda bagi setiap orang. Sungguh sayang, ternyata kemerdekaan tidak berarti merdeka dari kelangkaan barang kebutuhan pokok seperti minyak tanah dan minyak goreng akhir-akhir ini.

Sudah 2 hari ini minyak tanah menghilang dari pasaran, termasuk dari lingkungan tempat saya tinggal. Alhasil dari segelintir kios yang masih menyediakan minyak tanah, harganya sudah melambung Rp 5 ribu dari harga normal hanya Rp 2.600,- (harga naik 100%!!). Dalam banyak pemberitaan, kelangkaan ini terkait dengan program konversi BBM ke gas.

Saya tidak berpretensi mengatakan konversi minyak tanah ke gas itu buruk. Akan tetapi jika menganggap kesuksesan program ini hanya diukur dengan jumlah tabung gas yang diserap oleh pasar, itu adalah satu kesalahan. Dalam ekonomi, barang subsititusi adalah barang yang saling menggantikan karena utilitas yang diperoleh kurang lebih sama, seperti halnya minyak tanah dan gas. Yang terjadi ketika minyak tanah langka adalah orang mencari sumber energi alternatif seperti kayu bakar, tenaga matahari, briket batubara, gas LPG. Kayu bakar untuk konteks Jakarta sudah sulit diketemukan; apalagi tenaga matahari membutuhkan transfer teknologi tinggi; briket ketersediaannya masih dipertanyakan; termasuk pula gas LPG yang dalam program konversi ini disediakan dalam ukuran yang lebih kecil yaitu 3kg.

Selain persoalan distribusi dan ketersediaan infrastruktur pendukung program konversi gas, daya beli masyarakat khususnya menengah ke bawah harus menjadi perhatian. Salah satu alasan menggunakan minyak tanah adalah bisa membeli sampai eceran terkecil walaupun dari sisi harga ditanggung lebih tinggi. Saat ini gas yang tersedia hanya tabung 15kg dan baru-baru ini saja ada tabung ukuran 3kg, apa mungkin kita membeli gas 1kg saja? Ini problem lain dari sisi produksi dan biaya investasinya.

Pada masyarakat yang berada pada level transisi, pemilihan minyak tanah atau gas mereka cenderung indiferen. Artinya jika mereka saat ini masih setia dengan minyak tanah setiap saat mereka bisa melakukan konversi ke gas, dan masalah biaya konversi bukan lagi soal. Dalam program konversi sesungguhnya merekalah yang layak jadi target karena pada kelas masyarakat ini subsidi minyak sudah jelas salah sasaran.

Untuk konversi gas, saya melihat masih ada cara lain seperti pipanisasi gas ke lingkungan perumahan (Yang saya tahu sudah ada di lokasi tertentu di Bogor dan Surabaya). Secara finansial, konsumsi gas akhirnya memang jauh lebih murah dan untuk investor, target konsumen yang cukup besar akan menurunkan biaya produksi per unitnya. Dari sisi feasibility, langkah ini lebih baik dan mencakup area yang lebih luas serta cocok juga untuk masyarakat menengah ke bawah. Bandingkan dengan pemakaian tabung gas yang (1) mahal; (2) tersedia ukuran tertentu saja; (3) tentu saja hanya menguntungkan pabrik pembuat tabung.

baca juga beberapa alasan kenapa saya (belum) memakai gas.

Air pollution: an agenda for cleaner energy

Commemorating the earth day on 22nd of April, Minister of Environment announced a ban new cars production (here) to reduce air pollution in the big cities. It sounds sensible with the fact that population of car has been increasing over 12% per year. As a result, cars in the roads has exceeding the current carrying capacity of existing roads. Regarding to the target, this minister' proposal would be ineffective. Why?

Any minister even president can't do much in terms of stopping car production besides Indonesia is not car producer instead we assemble imported car domestically, some of them are completely build up (CBU). Let imagine that minister can persuade the companies not to sell cars to Indonesia, as soon as the companies will flee to other neighbouring countries just to find softer businesss environment' regulations. Unemployment would rise adding up to current 12,7 million jobless population (here)

Now, if you can't find any new car in the market, where do you go? 2nd hand market or maybe black market. Although the 2nd hand market gives you better price, it will be slightly higher than before. You may find good car but you have to be aware that only few of them has good quality in terms of latest technology to reduce emission. In situation where less choice available, you would end up with affordable car wether or not it has proper technology for emission reduction. Emission technology would not be your first priority to buy car. So, moratorium of car production is not really as green as it looks.

Clean energy is a global agenda, and it would not be solved only with reducing car production. Instead it should be integrated with other agenda such as providing more conservation area in the cities. It has to be put as part of spatial plan which regulate and enforce the application of emission stadard. Lastly, economic incentive such as tax reduction or tax burden would encourage or discourage people to comply.