29 March 2012
Last Monday evening, March 28, a major broadsheet’s news item in the net (http://business.inquirer.net /51135/civil-society-groups-launch-coalition-vs-oil-price-hikes) announced the launching of the Coalition Against Oil Price Increases. This group whose claimed advocacy is the “bringing down of oil prices” is reportedly composed of lawmakers, church people, business, consumer, as well as activist groups that intend to urge the administration to “undertake all possible measures to rein in and lower oil prices”. Citing the oil companies’ recent jacking up of prices 10 times as of last week versus the three times that the prices were rolled back, they claim that the government has not done much to address the problem. As such, they raised and expressed their support for the following four issues, namely: the “reduction, suspension or removal of the VAT on oil, the review or repeal of the oil deregulation law…a probe into the pricing schemes of oil companies, and a rollback in prices”. They also claim that “There are many options and possibilities for lowering oil prices. These range from short-term measures to medium and long-term proposals” - which maybe, they should provide more details on.
As to whether or not the group’s stance with respect to the four issues are valid, I believe that the coalition, being composed of citizens, have all the right to raise these concerns, and I think that it is the government’s duty and responsibility to openly and objectively address them. In this way, what can possibly be rectified is rectified; and those that can’t be, is properly explained to the public. I , for one would also like to be enlightened why I have to pay Php 58.35 per liter for my gas which is 21.46% more expensive than the price per liter in the US ( at $4 per gallon).
On the other hand, what does not fit well with me though, is, as I have observed, the inclination of some to resort to name calling, which has been taken advantage of by some quarters to degrade the President’s person. Although I don’t think the attempts were effective, I think the “demolition” effort was childish and even foolish, because it attempts to weaken the very person who must spearhead the effort to bring about the corrections being sought.
The current concern regarding oil and gasoline got me to read up on these items and what I learned got me really worried. First of all, it turns out that the price of oil has already reached the US$147/ barrel in July 2008 (http://oilpricefrom1999to2008.blogspot.com/), and I remember paying about Php60/liter for my gasoline during that time. The reason for this high level was the geopolitical tension then over Iranian missile tests. Currently, the price of oil is at US$124/barrel, which is partly caused by, again, by geopolitical tensions with Iran that threatens to block the Strait of Hormus, through which 20% of the traded oil worldwide passes. If the geopolitical condition deteriorates, then there is a possibility that the July 2008 experience will be repeated, bringing more oil related difficulties to all.
Another worry is the concern about “peak oil”, which is the point in time where oil production flows are unable to increase. In 2010, the International Energy Agency declared, based on data gathered from the oil fields, that the peak of conventional oil production occurred in 2006. It has also been established that the oil production growth has stopped in 2004 and has remained to within 5% of its peak (approx 86 million barrels/day) despite historically high prices. The problem is that despite the plateau in worldwide oil production, economies of countries like China and India continue to grow and keep on increasing their oil demand. Given the law of supply and demand, it seems that realistic global conditions point to more expensive oil in the future.
It seems that the oil problem runs deeper than how we perceive it, and we may have to start already focusing also on efforts to mitigate effects of oil shortage. This however is definitely not an easy matter to tackle. More details on this in my next articles on this subject.
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