Everything You Need to Know About The Rising of Gasoline Prices

Image source : Suara.com/Ema Rohimah
The recent hike in the price of fuel oil has left the public infuriated. On the same day when President Joko Widodo and the ministers held a press conference last September, the official fuel price increased by 30 percent. The hike—the first in eight years—raised the Pertalite's price from Rp. 7.650 to Rp. 10.000 per liter, diesel price from Rp. 5.150 to Rp. 6.800, and Pertamax from Rp 12.500 to Rp 14.500. This then begs a question, why did the price of gasoline rise?
One thing we should know, anything that impacts crude oil will affect gasoline. The price of crude oil, however, always fluctuates. One of the factors that can influence the recent price of crude oil is the supply and demand of crude oil.
The principle of supply and demand is the same as what we’ve learned at school, when demand increases, oil prices rise (or supply decreases), and vice versa. For example, Brent crude oil, a type of crude oil, plummeted to $22.58 a barrel in March 2020, reaching its lowest level since 2002 due to the COVID-19 pandemic. That can happen because a lot of businesses closed, which caused the low demand for oil.
Geopolitical events in any of the major oil-producing countries might also result in oil trade wars and affect oil prices. Oil prices can skyrocket as a result of conflict or crisis. This is because traders are concerned that it will limit the oil supply, causing prices to rise. The recent Russia-Ukraine conflict made oil prices top $100 per barrel for the first time since 2014 in February. What a number.
In addition to crude oil, outside factors may also contribute to raising the price. Retail prices for fuel oil can be influenced by production costs and government regulations, too. The components of production costs that must be considered are the cost of crude oil, the cost of refining, the cost of distribution and marketing, and the cost of taxes. According to the Finance Ministry, Sri Mulyani, the economic price (crude oil price + production cost combined) for Pertalite is supposed to be Rp. 14.450 per liter while diesel is Rp. 13.950 per liter. Of course, the retail gasoline prices that we pay in SPBU are already subsidized by the government.
Difference between subsidized prices at the pump and economic prices in Indonesia.
Source: Investor Daily
Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update
Government policy plays a vital role in ensuring that the price is reasonable for both the people and the country. According to President Joko Widodo, the energy subsidy had tripled this year from its original budget, triggered by rising global prices of oil and gas. So, rather than increasing the number of subsidies, the decision to raise fuel prices appears plausible for the time being. But why isn't the price of gasoline rising in neighboring countries like Malaysia?
Well, despite having similarities in many aspects, the production and distribution of energy are structurally quite different due to factors like market size and domestic supply. Indonesia has not recently made significant profits because the domestic market has become the primary market, which is more political and economical to people than profit-driven. This presents a challenge because consumers are used to the days of cheap, plentiful oil, while Indonesia is producing less than it once did.
Oil production and consumption in Indonesia
Source: BP Statistical Review of World Energy, various years
Pertamina’s limited refinery capacity means that it has become ever more reliant on imports and thus more sensitive to swings in global energy prices. Contrarily, Malaysia has consistently generated profits and has managed to hold gasoline prices steady despite volatility in the world energy markets. It is difficult to compare the two countries since Malaysia has a much smaller domestic market than Indonesia.
The rising of fuel prices is a really sensitive issue, any changes will have a significant impact on households and small businesses. Indonesia probably needs to allocate more spending toward human resources investment, like creating more jobs and improving education, in order to be resilient to the swings of global energy. It must do more than just raise the prices to benefit from its demographic transition.
References:
https://thediplomat.com/2022/09/why-the-price-of-petrol-increased-in-indonesia-but-not-in-malaysia/
https://www.investopedia.com/articles/investing/072515/top-factors-reports-affect-price-oil.asp
https://www.investopedia.com/articles/economics/08/determining-oil-prices.asp

The Society of Petroleum Engineers (SPE) ITS SC held an educational program called Energy4me for more than 20 science club members at Gloria Christian Junior High School. The program aimed to raise awareness about the importance of energy in life, increase understanding of energy and its implementation, and foster enthusiasm in the oil and gas industry.
The PIC of the event Asri Dewayanti said Energy4me is an educational program that educates the public about energy and promotes energy consciousness. This program was developed by the Society of Petroleum Engineers to help students understand the science behind the industry and the career opportunities available. "We believe that energy is the most crucial and hot issue right now. Therefore, to increase the potential of the nation's resources, it is our responsibility as a youth to take the initiative to accommodate the discussion forum for sharing knowledge,” added Asri.
The program that was held on March 15th included several experiments. One of the experiments was exploring oil seeps. Oil and gas seeps are natural springs where liquid and gaseous hydrocarbons leak out of the ground. These seeps are fed by natural underground accumulations of oil and natural gas. The activity modeled the formation and process of oil seeps. “The students learned how the density of oil and Earth's materials contribute to the process and any modifications that could be made to the model,” continued Asri.
Another experiment was Pump it Up, where the students learned how oil and natural gas are pumped from the earth. There are two methods that can be used: primary recovery and secondary recovery. Primary recovery is when oil comes out due to its own pressure, while secondary recovery is when oil is pumped out by injecting natural gas or water into the formation. “In primary recovery, the students learned how to drill for oil with the help of a chemical reaction between bicarbonate and acetic acid,” explained Asri.
The third experiment was Perforated Well Casing. Perforation refers to a hole punched in the casing, or liner, of an oil well to connect it to a reservoir of oil or gas. These holes in the good casing allow oil and gas to flow easily into the wellbore, increasing the production of a reservoir. The students learned about the differences in the production of a perforated and non-perforated well casing. “They also discussed the model limitations and ways to improve the experiment,” added Asri.
Furthermore, Asri explained, the final experiment was Water Injection, where the students learned about oil drilling using the secondary recovery method of extracting oil by pushing it up with the help of water. The experiment showed how pumping water into a formation can push oil upwards. It demonstrated that more oil can be extracted when water is pumped in the same system or a different pipeline.
Asri Dewayanti also emphasized the importance of energy literacy and the need to educate the public about energy. "Education is an effort to prepare future generations who are better, agile, and skilled. It fits perfectly with the need to develop people who have energy literacy and are interested in the oil and gas industry," said Asri.
The event was also a part of SPE ITS SC's actualization of social responsibility with the community around and to achieve SDGs 4 Quality Education and 7 Affordable and Clean Energy. Through this collaboration, SPE ITS SC hopes to contribute to building an energy-conscious and educated society. “It was a great honor that we could collaborate with one of the Junior High schools around us in addressing this matter. We feel such events are crucial to maintaining an energy community for a better future,” ended Asri.
By: Tyara Novia Andhin

Enhancing the knowledge of SPE’s Board of Committee about materials used in the oil and gas industry, Company Visit Division SPE ITS SC conducted Inspect 3.0. The event was held in Pertamina Hulu Energi West Madura Offshore (PHE WMO) Lamongan Shorebase and involved a site visit, presentation, and discussion about the industry.
Inspect 3.0 that has been conducted on 14th April is a series of company visit events and in this stewardship, visiting PHE WMO became the third company visit that has been conducted. PHE WMO is a subsidiary of PT Pertamina Hulu Energi (PHE), a subsidiary of PT Pertamina (Persero). PHE WMO primary focus is on exploration and production, but it also has a logistics base in Lamongan, which is crucial for the success of its operations.
The PIC of the event Abdulah Abraham Abror explained, company visit this time provided an opportunity for the students to see and visit the shorebase/warehouse under oil and gas-based companies related to the core values of SPE ITS SC. “Through the visit and discussion with the company representative, the students gained insights into the oil and gas industry and how the company worked,” Abror added.
More specifically, Abror said this event aims to provide knowledge about the materials used in the oil and gas industry, understand material management and handling processes, as well as introduce students to professions observed in the operating environment. “The event also discussed the end-to-end process of delivery material, including material management and how to handle it safely,” Abror explained.
According to Abror, the event started with a safety induction by PHE WMO, followed by an introduction from SPE ITS SC. The opening was then given by PHE WMO, which provided an overview of the company and their role in the shorebase/warehouse. Representative from PHE WMO explained, shorebase management makes remote oil and gas operations more easily managed logistically from nearby ports.
Furthermore, the role of shorebase as a support for offshore activities can take the form of a port, warehouse, field, or office. In upstream oil and gas activities, starting from exploration, production, transportation to the refinery, and selling of oil or gas, shorebase is needed. Equipment such as casing and tubing require a long time to order, so supply chain management planning is needed.
After the introduction, the event proceeded to the site visit. The site visit involved observing the drilling equipment, such as drill bits, various sizes of drill pipes, christmas tree, and other equipments required for drilling process. A discussion of oil and gas from both parties was conducted to exchange knowledge and ideas. “During the visit, the students had the opportunity to ask questions and discuss with the representatives,” Abror added.
Quoting one of the participants in the event, said Inspect 3.0 has been a great learning opportunity for me. He has gained valuable knowledge about the oil and gas industry, especially the materials and equipment used in the drilling process. "The visit to the Lamongan Shorebase has given me a real-life experience that cannot be gained through theory alone," he said.
The event was successful in achieving its objectives, and the participants gained valuable insights into the oil and gas industry. The event was an excellent opportunity for the students to enhance their knowledge, and it was hoped that it would help them to become more competent professionals in the industry. “This event is expected to strengthen the relationship between SPE ITS SC and the oil and gas companies, including PHE WMO,” Abror concluded.
By: Tyara Novia

Image source : Suara.com/Ema Rohimah
The recent hike in the price of fuel oil has left the public infuriated. On the same day when President Joko Widodo and the ministers held a press conference last September, the official fuel price increased by 30 percent. The hike—the first in eight years—raised the Pertalite's price from Rp. 7.650 to Rp. 10.000 per liter, diesel price from Rp. 5.150 to Rp. 6.800, and Pertamax from Rp 12.500 to Rp 14.500. This then begs a question, why did the price of gasoline rise?
One thing we should know, anything that impacts crude oil will affect gasoline. The price of crude oil, however, always fluctuates. One of the factors that can influence the recent price of crude oil is the supply and demand of crude oil.
The principle of supply and demand is the same as what we’ve learned at school, when demand increases, oil prices rise (or supply decreases), and vice versa. For example, Brent crude oil, a type of crude oil, plummeted to $22.58 a barrel in March 2020, reaching its lowest level since 2002 due to the COVID-19 pandemic. That can happen because a lot of businesses closed, which caused the low demand for oil.
Geopolitical events in any of the major oil-producing countries might also result in oil trade wars and affect oil prices. Oil prices can skyrocket as a result of conflict or crisis. This is because traders are concerned that it will limit the oil supply, causing prices to rise. The recent Russia-Ukraine conflict made oil prices top $100 per barrel for the first time since 2014 in February. What a number.
In addition to crude oil, outside factors may also contribute to raising the price. Retail prices for fuel oil can be influenced by production costs and government regulations, too. The components of production costs that must be considered are the cost of crude oil, the cost of refining, the cost of distribution and marketing, and the cost of taxes. According to the Finance Ministry, Sri Mulyani, the economic price (crude oil price + production cost combined) for Pertalite is supposed to be Rp. 14.450 per liter while diesel is Rp. 13.950 per liter. Of course, the retail gasoline prices that we pay in SPBU are already subsidized by the government.
Difference between subsidized prices at the pump and economic prices in Indonesia.
Source: Investor Daily
Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update
Government policy plays a vital role in ensuring that the price is reasonable for both the people and the country. According to President Joko Widodo, the energy subsidy had tripled this year from its original budget, triggered by rising global prices of oil and gas. So, rather than increasing the number of subsidies, the decision to raise fuel prices appears plausible for the time being. But why isn't the price of gasoline rising in neighboring countries like Malaysia?
Well, despite having similarities in many aspects, the production and distribution of energy are structurally quite different due to factors like market size and domestic supply. Indonesia has not recently made significant profits because the domestic market has become the primary market, which is more political and economical to people than profit-driven. This presents a challenge because consumers are used to the days of cheap, plentiful oil, while Indonesia is producing less than it once did.
Oil production and consumption in Indonesia
Source: BP Statistical Review of World Energy, various years
Pertamina’s limited refinery capacity means that it has become ever more reliant on imports and thus more sensitive to swings in global energy prices. Contrarily, Malaysia has consistently generated profits and has managed to hold gasoline prices steady despite volatility in the world energy markets. It is difficult to compare the two countries since Malaysia has a much smaller domestic market than Indonesia.
The rising of fuel prices is a really sensitive issue, any changes will have a significant impact on households and small businesses. Indonesia probably needs to allocate more spending toward human resources investment, like creating more jobs and improving education, in order to be resilient to the swings of global energy. It must do more than just raise the prices to benefit from its demographic transition.
References:
https://thediplomat.com/2022/09/why-the-price-of-petrol-increased-in-indonesia-but-not-in-malaysia/
https://www.investopedia.com/articles/investing/072515/top-factors-reports-affect-price-oil.asp
https://www.investopedia.com/articles/economics/08/determining-oil-prices.asp

The Society of Petroleum Engineers (SPE) ITS SC held a guest lecture program called SPEak Up! Guest Lecture in collaboration with SPE UTM SC from Malaysia and SPE PSU SC from the Philippines. The program aimed to increase the understanding of the members of the three SPE’s regarding the perspective of the oil and gas industry in the energy transition era.
SPEak Up! Guest Lecture is an annual event that developed by Academia and Competency Development Department SPE ITS SC. This year, SPEak Up! brought the theme regarding the perspective of the oil and gas industry in the energy transition era. One interesting topic was "CCUS as a Remarkable Solution to Support Emission Reduction" presented by Mutia Khairunnisa Mardhatillah.
Mutia Khairunnisa Mardhatillah is a graduate student from the PETRONAS University of Technology majoring in Petroleum Engineering at the master's degree. Currently she is a Researcher Assistant in the field of carbon capture and storage (CCS) at PETRONAS University of Technology. Also, currently she is working on his dissertation focused on the CO2-Brine-Rock Interactions during sequestration in Saline Aquifer. The observations are on the near-wellbore vicinity and the consequences from the interactions are analyzed.
In her presentation, Mutia said that currently, our world is experiencing a significant increase in the earth's temperature from year to year which is experienced by the large number of greenhouse gas emissions, especially CO2 that rises into the atmosphere. That way, there needs to be a step to prevent it.there are many ways that can be done to reduce greenhouse gas emissions, such as the use of renewable energy, methane reduction, alternative fuels, etc. However, in this case there is one way that is often discussed at this time, that is CCUS.
CCUS stands for Carbon Capture, Utilization, and Storage. It refers to a set of technologies and processes aimed at reducing carbon dioxide emissions from industrial processes and power generation. Carbon capture involves capturing carbon dioxide emissions from sources such as power plants, factories, and other industrial processes. Utilization involves finding ways to use the captured carbon dioxide, for example, in the production of chemicals, fuels, or building materials. Storage involves storing the captured carbon dioxide in underground geological formations, such as depleted oil and gas reservoirs or saline aquifers, so that it does not enter the atmosphere. CCUS is seen as a promising approach to reducing greenhouse gas emissions and mitigating climate change, as it allows for continued use of fossil fuels while reducing their environmental impact.
“CCUS consists of 4 stages, namely Carbon Capture, Transport, Utilization, and Storage. In the carbon capture stage, CO2 released into the atmosphere will be captured from fuel combustion or industrial processes. Furthermore, at the transport stage, CO2 will be transported via a ship or pipeline. After CO2 is transported, there is a utilization stage where it can either be used as a resource to create valuable products or services, but it doesn't stop at that stage, CO2 can also be injected into underground geological formations for the storage stage.” Mutia said.
However, there are still several obstacles in its application, such as high cost, regulatory framework, and public acceptance. For this reason, Mutia hopes that companies that will later apply this technology and the government can work together with the surrounding community for the implementation of this CCUS technology.