By: Miguel Antonio Magrata
“Unano na lang ang hindi tumataas.”
Though it sounds mean, it is the usual expression being uttered by most Filipinos to vent out their frustration on the continuously spiking prices of basic commodities and services.
The country’s inflation rate is 7.7% as reported in October 2022, the highest increase in 14 years. While the Bangko Sentral ng Pilipinas’ best projection is that inflation will peak either this month or the last month of this year.
As usually explained by economists, factors such as demand and supply plays an important role in the prices of goods and services, and to our economy in general. Inflation is a result of an imbalance particularly when the demand is higher than the available supply causing the decline in purchasing power of a currency.
Petroleum products can be identified as the initiating force among all commodities. It is so vital that other things can’t be done without it. Since it drives the large portion of the economy, any movement in its price will also cause the prices of other goods and services to move.
Over the past months, gasoline and diesel prices rose to as much as 80 pesos per liter. The main reason being pointed for such a spike is the Russia-Ukraine conflict. You may wonder why it has such an impact on us when Russia is not even our main source of oil. This is because of the sanctions imposed on Russia, and countries who used to purchase the majority of their supply from Russia looked for alternative sources like Middle East countries (where majority of our supply came) thereby increasing the demand and in turn, the price of oil in the world market.
Currently, we have two active natural oil and gas fields: Galoc oil field located in north-west of Palawan and Algeria oil field located in the town of Algeria, Cebu. We also have a refinery in Limay, Bataan. It is unfortunate though that these facilities are not sufficient to supply our daily needs of fuel.
Furthermore, what was more ironic is that the crude oil produced by our domestic sources is not compatible with our local refinery. The Department of Energy explained that because the refinery was built a long time ago it was designed accordingly to be able to process imported quality crude oil only. While on the other hand, the product of Malampaya gas field is solely used to power projects and not oil.
Transport sector was the most affected among all and many public utility vehicle drivers were already struggling at the onset of Covid-19 pandemic. The cash assistance and subsidies provided by the government wherein there are still a number of drivers who were not able to receive, is just another band-aid solution. The problem is still there after the given money has run out. In the end, the commuting public bears the burden as fare on public utility vehicles also raise along with other commodities.
Fuel and oil price hike will keep on hunting us because we are greatly dependent on importing oil and fuel from foreign sources. The government must then have permanent policy and programs to address this problem. Review and revision of oil deregulation law can be given a consideration so that the government will have the power to intervene in the event of a spike in oil prices, since the said law does not seem to serve its intended purpose nowadays.
Taxes imposed on fuel and oil products can also be reviewed. More importantly, we need to have a self-sufficient supply of fuel and oil. It may be difficult and costly, but studies and efforts must be carefully and continuously exerted to check and develop areas in our country that are proven to contain these resources. Our country is gifted with abundant natural resources, we just need to take action to maximize these resources to our full benefit.
TAGS: Fuel and oil price hike, inflation, 7.7% inflation rate, Russia-Ukraine conflict, gasoline and diesel prices.
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