Saturday, April 09, 2005

Something stupid (PJI editorial 10 April 2005)

OPEC promised to raise crude oil production by an additional 500,000 barrels per day to ease quick-as-eyewink price quirks in the global market. However, production capacity of OPEC member nations remains tight while worldwide demand for oil remains on an upswing.

That ought to explain why crude oil hasn’t bothered to pause in its steady price climb.

In knee-jerk response to this, some 47 transport groups throughout the archipelago are out to take to the streets on April 11 to 13 to call on the government and oil multinationals to stave off oil price spirals.

As in previous transport strikes, commuters and daily wage earners will get stranded—down the drain goes a few hundred millions of pesos in lost business opportunities and productive man-hours.

In recent years, major oil players have shut down local refineries and laid off a few hundreds of people manning those refineries to cut costs. The oil players have turned to outright importation of finished oil products largely from Singapore.

Surprisingly, not one of those 47 transport groups poised to unleash verbiage and verbal abuse on April 11-13 have tried their hand at procuring their fuel needs in bulk from sources overseas.

Bulk procurement means volume discounts that can entail less fuel costs and ought to translate into profit margins for a transport cooperative who dares to try such tack. Such a sensible option ought to be less bothersome to ordinary commuters—sa hirap ng buhay ngayon, gusto lang namin na hindi masayang ang tatlong araw na ubra kaming kumita kahit konti.

Then again, asal-manok yata na mahilig lang magpuputak at magtitilaok ang mga nasa transport sector.

No amount of noisemaking, transport strikes and government intervention hereabouts can rein in or leash tight the price of a global commodity like crude oil. Its price in U.S. dollars is shaped by demands of users and consumers throughout the world. Fact is, the Philippines constitute less than one percent (1%) of the entire global market for fuel products.

For another, conservative estimates has it that the earth’s reserves of fossil fuels will only last for around 60 years. The growing scarcity of such a strategic commodity will simply translate to prices climbing over the roofs and up into the clouds.

The regime of high oil prices is here to stay. That is the reality we have to accept.

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