RETURNING TO NOT-SO-NORMAL TIMES

The Philippine Star
11/16/09

The National Disaster Coordinating Council has lifted the state of calamity in Luzon. Correspondingly, the joint task force on oil composed of the departments of justice and energy has recommended the lifting of the freeze order on fuel prices in Luzon effective today. Back to normal.

The price freeze issued Oct. 24 was intended to help the country rebuild from the effects of three typhoons that destroyed nearly P39 billion in agricultural crops and infrastructure, and killed almost a thousand people. Now that the last vestiges of flooding are being swept away, back to normal too.

Three weeks after Executive Order 839 was issued instructing oil firms to maintain pump prices in Luzon at Oct. 15 levels, we should be seeing pump prices rising again even if only on a staggered basis to prevent any unusual price spikes in compliance to the strong request by the President. Back to normal again.

Losses reportedly incurred by the oil companies during the price moratorium period will surely be factored in the forthcoming gasoline, diesel and LPG price increases. It’s a good thing that crude prices recently have dropped by as much as $3 per barrel and the peso has been appreciating against the US dollar. Otherwise, it would be a double whammy.

Safety nets

If the President’s economic adviser and Albay governor Joey Salceda is to be minded, any increases in gasoline and diesel will be spread out within the next four weeks, and any hike in LPG prices will be distributed over a period of six weeks. This is intended to be part of the “safety nets.”

Prior to issuing the return-to-normal order, there were discussions to cushion the impact of the price freeze lifting on the commuting public, particularly those riding jeepneys, and selected LPG consumers. Another safety net.

Diesel used by jeepneys may be kept at subsidized levels to prevent any fare increases. Poor households may avail of discount coupons for LPG through the Department of Social Welfare and Development. More safety nets.

All these safety nets are understandable given the price sensitivity of Filipinos, especially those belonging to the low-income levels, to transport fare hikes and cooking fuel. But how long can safety nets shield them is going to be a difficult juggling act given the anticipated continuing rise in crude oil.

No more cheap oil

International crude prices have taken a dip to $76 per barrel from P79 over the weekend but are still decidedly higher than average levels during the first part of the year. For the next two months, prices will definitely not be expected to drop to $30, which had been about the lowest point so far this year.

The specter of rising crude oil prices in on us once again. Still highly dependent on importations of this commodity, the country’s economic growth potential is now being threatened as pressure on global crude supply is affected by once-again rapidly rising demand.

China and India are again a beehive of economic activity, and their appetite for crude oil to power growth can be starkly juxtaposed to what is being apparent as a slowing down of new sources of this non-renewable energy source.

The oil price shocks of the 1970s and 1980s had dramatically reduced the growth in oil demand by triggering substitution to other fuels and improvements in energy efficiency. But this is not happening today even when crude oil prices spiked in July last year to its highest ever of more than $140 per barrel.

Rising international oil prices starting in the early 2000s was the result of increasing demand growth. A tipping point was reached in mid-2008 when supply growth was not catching up; this was when oil prices started behaving abnormally.

Any pressure on crude demand and supply was temporarily held back by the global economic crisis triggered by the collapse in housing loans in the U.S. But now that demand is once again rising, the world is seeing higher oil prices.

Reality check

Truly, the era of cheap oil is over. What this tells us is that the economy will be in for some sharp jolts in the next few years as it copes with the reality of higher petroleum product prices.

More fundamental solutions are needed, for example, for perennial problems such as that of a public transport service that is dependent on jeepneys that have the most highly inefficient, not to mention, pollution-spewing engines plying Metro Manila roads. Solutions will have to be developed for the social implications of the jeepneys’ inevitable phase-out.

The bottom line: we can’t ignore the fact that we will be living in a world that’s going to be fueled by high-priced oil. The quicker we come up with sustainable coping mechanisms, the better for all of us. As we now all realize, the mere issuance of an Executive Order is not one of them.

2009 Philippine Collegiate Championship update

De La Salle Green Archers, 2008 Philippine Collegiate Champions, are back in the “Sweet 16” Finals of the Philippine Collegiate Champions League. The Green Archers swept their games against St. Francis of Assisi Doves, Don Bosco Technical Colleges Grey Wolves and the UNC Greyhounds, in the Naga Zonal Qualifying games held at the University of Nueva Caceres Gym at Naga City.

Basketball fans filled the UNC Gym to the rafters during the three-day series, and the visiting players from Manila were surprised by the warm reception and attention accorded to them. Rev. Msgr. Zosimo Ma. Sanado of the Naga Metropolitan Cathedral hosted the teams for breakfast after Eucharistic Mass celebration and Naga City Mayor Jesse M. Robredo, a rabid basketball fan, personally greeted the players and opened the games.

It was an exciting and well-organized series, thanks to the efforts of Edper Brojan, head of the organizing group, and the very supportive team from the Mayor’s Office.

PCCL is also inviting collegiate basketball fans and students to join for free the two contests recently launched. “Pick the Final Four” contest is now open and simply log in at www.CollegiateChampionsLeague.net to submit your choices. Those with the correct “picks” will be awarded with surprise gift items.

The other contest is for amateur camera enthusiasts who may submit their action shots of players during the games of the “Sweet 16” Finals. Log in at the PCCL website for details.

For updates on progress of teams as they continue the journey in the 2009 Philippine Collegiate Championship games, visit the official website, www.CollegiateChampionsLeague.net or send email enquiries to PCCL_secretariat@yahoo.com.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, SalcedoVillage, 1227 MakatiCity. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net