Start planning now in case of a new oil crisis
Credit to Author: Tempo Desk| Date: Mon, 29 Apr 2019 16:30:12 +0000
WE are now closely following the movement of world oil prices for they inevitably impact on market prices – inflation – in our country. Philippine market prices shot up last year, according to the government’s economic managers, principally because of this global oil price movement, although critics believe a great part of the reason was the new tariff on diesel importations imposed by the TRAIN law.
We were able to stop the rising prices around October last year through a number of measures, including the enactment of a Rice Tariffication Law that ensured sufficient supply of low-cost imported rice. World oil prices also stabilized, easing the pressure from that end.
But now, in this fourth month of the new year, global oil prices are again beginning to rise. Brent Crude oil prices have risen almost 40 percent since January, reports from Singapore said. This was blamed on the United States decision to toughen its sanctions on Iran, calling on other countries to stop importing oil from that country or face punitive action. The Organization of Petroleum Exporting Countries (OPEC) is also reducing production so as to raise world prices.
Brent Crude is now at $63 per barrel this quarter, according to Oxford Economics of the United Kingdom, a leader in forecasting global market trends and assessing their economic, social, and business impact. “But the market is tightening and all it would take is one more shock to the supply and oil could reach $100 per barrel by the fourth quarter of 2019. If this should happen, the Philippines would be the hardest hit among the world’s emerging markets,” it said.
We hope these fears do not materialize but they are a distinct possibility in the view of international business groups which are constantly watching and analyzing economic and political developments affecting world affairs. Oxford Economics even singled out the effect on the Philippines in its assessment of ongoing oil developments.
It took us months to recover from our inflation problem last year, a period that saw households all over the country suffer from soaring market prices. This early, our officials should keep a close watch on world oil developments for they will inevitably affect us. They should be ready with plans and programs with a view to averting the worst of the crisis that our people went through last year.