By Nurul Hanani Hasmin
GOMBAK, 25 February 2016: “Oil is a non-renewable resource and it is something that you can only use once,” said the Deputy Vice-Chancellor (Academic) of University of East London, Professor Nora Ann Colton.
A talk on ‘Oil Prices and Malaysian Economy’, organised by IIUM Institute of Islamic Banking and Finance (IIiBF), was successfully held at AmBank II in IIUM Campus on 24 February.
It was held from 10.00 a.m until 12.00 noon with limited seats of 50 participants only. It was moderated by Assistant Professor of IIiBF, Dr. Adam Abdullah.
Prof. Nora shared her insights regarding the oil prices stating that “they drop radically fast, and they will not come up at the same rate.”
In making the statement she tried to remind the participants that even though the oil prices may drop sharply, it will not increase at the same rate as it drops. This is because”it is easier to drop the rate but a lot harder to increase it again.”
She said: The fluctuation of oil prices is due to the cost of oil production. Oil, when it is extracted from the ground, it really lies in there in three layers. The first layer or the primary layer is where you drill down and extract the layer out. Each time you go deeper down, you find oil and it lies underneath the earth and to get there, it is more expensive.”
Oil companies have developed efficient ways to extract oil that affect the cost of production.
Prof. Nora said, “When the oil price is going up, the United States investment is taking place because they think it is more rational for them to invest to produce more oil.”
“The United States will get the benefits if they invest when the price of oil is increasing.”
She added, “The Malaysian economy has to do more with expectations in the financial market and the stability of government and not necessarily about oil.”
The percentage of government revenue is going down. Malaysia should benefit more on the weak money currency as it makes Malaysia more competitive in terms of national trade, according to Prof. Nora.
The talk was intended to help participants consisting of both students and lecturers, to understand more about the present state of Malaysian economy and how it has been affected by the oil prices.***