A Blessing may be a Curse vis o' vis

I have been reading the news lately and I noticed that we have a short supply of cooking oil in Malaysia. Cooking oil is one of the essential items in the Malaysian household. The lack of supply of cooking oil will certainly affect the livelihood of Malaysians.

When I read the news, I am trying to relate the lack of supply of cooking oil to the high crude palm oil(CPO) price in the world market since palm oil is one of the key ingredients in the making of the cooking oil. As of today, Malaysia is one of the largest palm oil producers in the world. With a high CPO price in the world, Malaysia will be more than willing to sell it to the world market. However, the high price also spells higher cost for cooking oil producers who depends on palm oil to produce their final product. With a higher cost, the cooking oil producers will have to cut down their production in order to cut down cost and to maintain a certain level of profit in order to justify their cooking oil production operations.

As a result, the lower supply of cooking oil may not meet the demands of the Malaysian market. Malaysian consumers were rushing for their cooking oil due to the fear of the lack of cooking oil. In order to cut down the fear of the lack of cooking oil of the Malaysian citizens, the Malaysian officials decided to rationalized the supply of cooking oil. Well, when someone rationalize a market, it may help the market in the short run but it may have some side effects in the long run. Well in the short run, Malaysian consumers will be able to purchase their cooking oil supply at a controlled prices in a controlled amount. However, the rationale of cooking oil may not spell good for the cooking oil producer since, according to the papers, they were required to fulfill a certain amount of cooking oil in order to satisfy the demands the market. In other words, they will be required to take up more loss in their profits in order to fulfill their orders. If things turned bad, I am sure the cooking oil producers will try to either stop their productions or they will be force to look for some other alternatives for palm oil in order to produce more cooking oil that satisfies the Malaysian consumers that brings in a justified amount of profits.

I guess the case study looks quite similar to the many hyper inflation scenarios that we have seen occurred in the world. We were lucky that there are still many other alternatives for cooking oil, such as olive oil etc., that are available in the market. As long as the Malaysian consumers realized the true picture, they will have to try to change their consumer habits on their cooking oil options. After my naive analysis, I hope that we have more options for our gasoline supply because, after more than 100 years, we have yet to find another alternatives for crude oil. If no alternatives is discovered in the next 50 years, our children may not be able to sustain the level of economy comfort that we all enjoy today.