The Hypocritical Politics of Fuel Subsidies
Monday, March 28, 2022
Once upon a time on 2015, President Joko Widodo stopped fuel subsidies. Instead of spending money that favors private car owners, the government would rather used it for more urgent needs. Many people gave two thumbs up and applauded this policy.
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WHEN the government adopted this policy, actually the market was very conducive to erasing fuel subsidies. Oil prices were cheap. After reaching its peak at US$61.9 per barrel in May 2015, the Indonesian Crude Price (ICP)—an important benchmark for fuel retail price calculation—kept falling and reached US$27.5 by January 2016.
With the ICP that low, practically fuel subsidy was no longer necessary. Fuel prices at pump stations would
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