Subsidy cuts "matter of survival": Petronas CEO
KUALA LUMPUR (Reuters) - Gradually removing fuel price subsidies in order to temper growing oil demand has become "a matter of survival", the chief of state oil company Petronas said on Monday, days after Malaysia hiked rates sharply.
"Nations must work toward the gradual removal of generous energy subsidies, which cause unmitigated consumption and market distortions that are unmanageable in the long-term," Hassan Marican said in a speech opening the Asia Oil and Gas Conference.
"Saving energy is no longer about achieving cost-savings, it is a matter of survival and providing for future generations."
Oil prices surged nearly $11 on Friday, their biggest one-day gain ever, and are up more than 40 percent this year, partly on fears that long-term oil supplies will struggle to meet demand, particularly from booming Asian economies.
Malaysia, which uses some of its huge oil and natural gas export revenues to subsidize some of the cheapest fuel prices in Asia, raised petrol prices by 41 percent and diesel by 63 percent last week, pledging to bring pump rates into line with international prices within the next few months.
That move follows similar price hikes by Taiwan, Indonesia, Sri Lanka and India, as more governments that keep fuel prices cheap are forced to pass on some of the soaring price of global crude, which has doubled in a year. China has resisted raising prices as Beijing makes tackling inflation its top priority.
Allowing consumers in fast-growing Asian nations to bear more of the burden of surging costs should help rein in demand, one of the catalysts for oil's six-year bull run, although many analysts say that is unlikely to happen unless prices rise further.
The short-term impact may be more keenly felt on the political front, with both Kuala Lumpur and New Delhi facing protests over their decisions to increase prices.
U.S. Energy Secretary Sam Bodman on Saturday called for more countries to scrap fuel price subsidies.
(Reporting by Ramthan Hussain; Editing by Ian Geoghegan)
