Petroleum

The petroleum sector is a key component of Malaysia's economy. According to The World Factbook also known as the CIA World Factbook, Malaysia is ranked as the 27th overall highest petroleum producing country. Each day a total of 84,820,000 barrels of petroleum oil are produced in the world. Malaysia is responsible of producing 693,700 barrels daily. This accounts for 0.82% of the total share of the world. Annually, the Malaysian government spends approximately RM42 billion subsidizing petroleum oil, diesel and gas.

Malaysia's population is growing rapidly as time goes by. The number of inhabitants in Malaysia has escalated from 28,274,730 people in the year 2010 to 28,728,610 people in the year 2011. A half a million increase in just a mere one year period. As Malaysia's population grows, the nation's petroleum oil demand increases accordingly. The increased population growth increases the number of buyers for petroleum. A total of 556,000 barrels of oil are consumed in 2011 compared to 536,000 barrels in 2010. Therefore, the number of buyers affects the quantity demand for petroleum.

Other than that, the consumer's income is another factor affecting the demand of petroleum. Petroleum is a normal good, which means that its demand increases with an increase in consumer's income. The mean household income for Malaysia was recorded at RM4,025 per month in 2009, an increase of 9.2 per cent as compared to RM3,686 in 2007. The increased household income also influenced the petrol industry causing an increase in fuel consumption.

Advertisement is another contributing factor to the demand of petroleum. In Malaysia, we often see advertisements of petroleum being broadcasted on television and newspapers. Billboard advertisements are also used to promote petroleum in Malaysia. Plenty of money is channeled towards advertisements and commercials to provide information of petroleum to the Malaysian public. As advertisements increases, the quantity demanded of petroleum...