In
theory, economic should be meant to be a stable market where the supplier
supplies products to meet the society demands. Unfortunately, things don’t
always go as plan because in the world of economics, things and value are never
stable and are always changing. As a result of these, problems such as the
surplus, shortage, meeting market equilibrium price,
substitution effect, attainable point and unattainable point exist.
According to the article that I have
read, serious problems of shortage exist when the demand for electricity
exceeds its supply. I believe the main reason why the demand exceeds the supply
is because of the lack of fossil fuel which is mainly used to produce
electricity. In Malaysia, we get our fossil fuel from neighbouring country because
local sources are depleting which partly the cause of our shortage in
electricity production. The more reason why Malaysian needs to appreciate the
amount of electricity we have is because we do not want our economy to fall. Recently
when Myanmar faced an energy shortage that was the result of long term
mismanagement of the government, it leaves many thousands to suffer because
when there is not enough electricity supplied to the factories, workers loses
their jobs and causes inflation within the country. If Malaysian does not
treasure the amount of electricity they have now, the economic might become like
Myanmar.
In addition, I believe another
reason why the electricity industry does not meet locals demand is because they
are facing human resource problem where not enough skilled personal to run the
computers are produced. Even though many engineers are produced yearly through
local university, they cannot handle the “new computer numerical control (CNC)
machines with more than five axes” because of the lack in experience and
insufficient knowledge about the equipment. Furthermore, the high demand in
electricity could also be related to “Johor’s plan of their new regional oil
and gas (O&G) hub in line with the Economic Transformation Programme” which
causes a huge power demand in Johor. Besides that, it is believe that cost and
profit plays a major role in the power shortage in Malaysia and this is proven
when a conflict between the government and TNB arises. TNB is delaying their
project to construct a high tension transmission towers due to some land
problem even though the government had proposed several other routes. TNB keep
refusing to accept the alternative route due to some cost and profit problem,
thus delaying the construction of the towers and causing power disruption which
leads to insufficient power being distributed.
Furthermore, the high demand for
power can be link to the factors that move a demand curve. As for all we know,
Malaysian population are growing in great numbers day by day which can be lead
to “the larger the population, the greater is the demand for goods.” There are
no more than 2 electricity companies that supplies electricity for Malaysia while
the population in Malaysia is growing. With the increasing population but
barely 2 electricity suppliers, the population vastly outnumbered the numbers
of suppliers which causes a shortage. In the graph below, a shortage occurs at
location “a” whereby the demand of electricity is more than the electricity
supplied.
After studying this graph, the new
demand curve arises because the supply for electricity is constant whereas
population in Malaysia increase continuously which causes the demand for
electricity to increase. One can conclude that the new market equilibrium point
is the best solution for this problem because at that point, all resources are
used efficiently.
Malaysia’s
situation now is at point “a” where by that position in known as a shortage. A
shortage means that a situation where the goods demanded is greater than the
good supplied in the market. At this point, when TNB
decides to push up its electricity price from 20sen pKw to 35sen pKw, both
point will reach the new market equilibrium point whereby the equilibrium price
will act as a regulator and allowing opposing forces to balance each other.
Besides that, the law of demand also states that the higher the price of a
good, the lower the quantity of good demanded. By using this law, when the price
of electricity increased to 35sen pKw, the demand of electricity will decrease
thereby allowing both parties (consumers & suppliers) to meet an agreement
that will balance and benefit both parties.
To
cope with the power shortage problem, I suggest more people should try to tap
in the electric industry in Malaysia such as the independent power producers
(IPPs). IPP compose of a few organizations that produce electricity and sells
them to TNB which in return sells them to us Malaysian. This opportunity was given
to the IPP Companies when a big blackout occurred in Malaysia on Sept 29, 1992
and on Aug 3, 1996 and after the incident, IPP Company number increases when
they start to realise TNB can no longer produce enough power to sustain the
entire country based on its performance and therefor they start to build their
own power plant, generates electricity and sells them to TNB to ease their
burden and meet Malaysian demands for electricity.
Lastly,
due to the power shortage, the Malaysian government have been considering of
using Nuclear power as an alternative power source to the depleting fossil fuel
electricity because Malaysia could not ignore the benefits of nuclear power in
future generation energy mix. Though Nuclear power might be seen as a very
tempting alternative power source, we must never forget the risk that it poses.
Nuclear power is known globally as an alternative power source, but it also
proof to be nuisance when the nuclear generator generates too much power at one
time. According to an article that I have read about electricity in France, I
found out that there was a surplus of nuclear generated electricity in France
which instead causes the country to face a huge loss when they were forced to
sell off excess electricity to another country for a price lower than its own
original cost.
Original article link: http://thestar.com.my/news/story.asp?file=/2012/2/16/nation/20120216103037&sec=nation
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