The price and supply of oil is hotly debated the world over. Just look at this chart which you can find from oil analyst gregor.us:

Free Market Oil has dropped by over 2 million barrels per day since December of 2003. If your professor or your local economist or perhaps national newspaper is still pounding the table that supply always makes a response to price–even in natural resources. -gregor

Just so we’re on the same page, December delivery of oil, as of this writing is at US$77.43 a barrel.

Philippine journalist Ricky Carandang wrote in his blog that Arroyo repealed the law of supply and demand and argued that:

the Arroyo regime continues to force pump prices at levels below the market price, it will eventually lead to a shortage. And that’s what we’re begining to see. Gas stations may not call it that, but they are already rationing fuel and are now threatening to stop importing altogether.

How then can one do business in the Philippines when the law says the Oil Industry is a deregulated market and government itself does another?

Oil companies are under threat to be sued under economic sabotage. If there is anyone that needs to get sued, under economic sabotage it is Gloria Arroyo and this economic self destructive policy.

What if Executive Order 839 isn’t about the price of oil or its supply?

EO 839 is a populist move. It is easy enough to see that this is done under the guise of compassion, “to protect the poor” and victims of the recent typhoons from market forces. It is a false oasis. This road leads only to greater hardship down the road. It appeals to shortsightedness and reveal greater uncertainty in the market place. In fact, EO 839 only strengthens the perception that the Philippines is unstable and that the law is bendable at any given time. If the Philippines was at all serious about solving its energy problem, then it should accelerate plans to be less oil dependent. That is what a responsible economic manager ought to be pursuing.

What if this has has little to do with the Price of Oil or about rebuilding the damage of the recent typhoons? What if this has nothing to do with improving the lives of Filipinos ravaged by typhoon and poverty? With Arroyo, by law, set to complete her term of office by June 2010, and her party’s candidate trailing surveys, is it a stretch to say that this is a scorch earth strategy to make it difficult for the next president to do anything at all?

***
This post first appeared on Emerging Voices.

The price of oil is close to US$100 per barrel (104 to 109). you can find the numbers over at bloomberg (15 minute delay per change). Next month could be an entirely different picture.

Yesterday was all about the President asking oil companies why they haven’t reduced prices. While this is a half-step to outright intervention that I believe this is wrong. It defeats the whole purpose of a free market and an oil deregulation law. Misplaced market intervention is just plain wrong.

Let the small players differentiate themselves from the big three. Why do we insist that all of ‘em have the same prices whether high or low? So lets all buy our oil from the lowest price. But that’s not always the way is it?

By the same argument, BMW who makes cars should be priced the same as a Kia. They both have different target markets. they have build quality differences. Why do we keep on interfering with how our oil players price their products?

A couple of days ago I was in Greenhills buying a Playstation 3 (which by the way is an awesome piece of engineering). One store priced at 17k, another at 19k. same product. same 40GB spec. One difference was that the 19k guy offered a product replacement within 3 months if the machine breaks. i took the 19k– i wanted the comfort zone. that was my deal breaker.

Another person would have chosen the lowest price, which would be his preference. Having learned from my  buying experience the comfort zone of care is phenomenal.

My point being the nature of economics is that we buy products and services depending on how good the deal is to us. That’s free market. It is good when two parties agree to do business.

Now, here comes transportation. At the height of oil they demanded the right to raise prices. Prices went up and now transportation doesn’t want to reduce prices because their argument is that oil has not gone down substantially. Why can’t we deregulate our transport industry?

Why insist to be shackled by 19th century thought?

Why not let every jeep operator determine what their prices are? They have variable cost anyway. Some may be willing to charge lower because their expenses may be lower. Others may want to charge higher because they can afford softer seats or air conditioned jeeps. We may see better quality jeeps to cheap ones that are bang for the buck. And others seeing that the prices may not be worth his salt to pay, will just walk.

My point being— why not stop this farce called socialism and regulated markets and get it on with free markets. Market intervention of any kind is simply bad for everyone. Do not reduce prices— deregulate the market.

Nagpagawa na ako ng birth certificate sa Recto. Nakaprint naman sa NSO paper.

The “friend’s” excuse for taking desperate measures is the fact that she wants to become an OFW — our latest breed of national hero. And doubtless, nothing will stop her — if she has resorted to Recto to rectify (pun intended) her birth certificate issues and the DFA refuses to issue her a legit passport, she would doubtless return to those run-down shanties alongside the LRT Line 2 terminal at that avenue to obtain a fake one.

In a post 9-11 world, anybody with a fake passport can and will be treated as a terror suspect. But that hasn’t stopped Filipinos from faking passports anyway, or working in Iraq despite a ban, for that matter. What infuriates me and my wife, however, is that not only is she willing to commit (or technically, has already committed) a crime, she also has the gall to assume that my wife will willingly be complicit to the act without a batting an eyelash.

Tough luck. My wife just told her to consult a lawyer. Or approach a more desperate travel agent.

The irony, of course, is that the “friend” is just one of many Filipinos who, when asked why they’d choose to work abroad, will spit out the same standard complaints stating that there are simply “no opportunities” in this country because “the government is corrupt” and “the economy is bad” so on and so forth. In fact, there are many Filipinos who would complain about how corrupt, say, traffic enforcers are — all while driving a luxury SUV ignoring red lights, at twice the speed limit, without a fastened seatbelt and on coding day within coding hours to boot.

Meanwhile, two protests came up against them “big oil companies” the past few days, with very different results. The first one occurred last Friday, where militants threw bags of used diesel on the offices of Petron. The second, more successful attempt was at Shell last Monday, where they were able to hurl paint bombs and spray paint at the Shell main building.

Where’s the punchline, you might ask? When, at the first incident, security guards tried to beat off the militants who were hurling used diesel with their batons, the protesters had the gall to plead not to be hurt:

But the students suddenly began throwing plastic bags filled with used diesel on the walls of the building, prompting some security guards to beat them with sticks.

“Huwag kayong manakit, hindi niyo kailangang manakit [Do not hurt us. You don’t have to hurt us],” said Zarate. [Inquirer.net]

Emphasis mine. So, did they expect the guards to give them hugs and kisses?

It frustrates me when it is obvious that the very people who are supposedly moving towards “the betterment of the country”, being considered as “heroes” and “forces of change” and, belonging to the youth demographic, considered as “the hope of the nation”, will demand that establishments, institutions, and the system per se hear and respect their opinions while they do not display any modicum of decency towards them, and in fact commit the same crimes they accuse the elite of committing. It frustrates me when, while these militants expect the middle class (us, essentially) to rally behind their cause (lest you will be branded as “apathetic”), they display brash, ill-considered behavior more akin to acts of juvenile mischief than anything else.

What way too many Filipinos apparently miss is that, in order to defeat one’s enemy (in this case, the system, or at least the widespread corruption and decadence that characterizes it) one has to treat that enemy with respect. Not because it deserves respect, but because treating it with respect is a safeguard — to remind one’s self NOT to underestimate one’s enemies, and also because by treating it with respect one will remember not to become that which we hate — as in the case of passport-faking “heroes” or paint-bombing radicals.

It’s not just about anger. In fact it should never be about naked aggression. It should all be about respect.

I will leave you with a quote from Stan Tyminski, who ran for the Polish presidency (and lost by a narrow margin) in 1990, from a commentary he published regarding respect for one’s enemies [PDF]. Needless to say, you only need to replace “Poles” with “Filipinos”:

As much as I respect and even admire our enemies, I perceive the real problem with my countrymen. Having a strong, intelligent and deceitful enemy among us requires even more strength, intelligence and conceit. There is a saying that the value of the man (sic) is measured by the quality of his enemies… Unless we respect them and try to best them, we Poles will never win. We will always be slaves. [Stan Tyminski]

Let’s start treating our enemy with respect. And then, we could fight back.

Like a druggie, we’re fraking oil dependent but we’re slowly unable to afford the substance. The world’s changing and changing rapidly. (If you’re interested in Energy thoughts, you can check out The Oil Drum’s Peak Oil Overview and a database of oil supplies worldwide).

Throw out all those things like opposition to transport rake hike. Market Forces will be dictating that everything is going to go up. Inevitable. 

Carpooling, scheduling activities in the same area to avoid traffic— are age old pebble throwing at the rushing truck solutions but I think, they do add up if everyone does it, which is great and all. Of course it is no different for Government dole-out plans, which I think is an even bad example of a pebble being thrown at a rushing truck. Symbolic as hell, but is it effective?

Those who can afford, might I suggest we invest in alternative power sources— solar, wind, etc whatever works for you and your business. If by adopting these technologies, we can drive the cost for others lower, wouldn’t that be great? If the Tesla was available here, wouldn’t that be great too?  

There are other ways we can reduce our oil dependence, or other great ideas to going eco-friendly or other power sources we can avail. We’re going to need high tech, ecocities. Perhaps, we can have high tech bio villages and barangays first like this initiative from Ecobuilders. Treehuggers say we need to go green because of Climate Change. It may be so, but a greater incentive I think is that, it is time to go green because, it makes great economic sense. That, and because OPEC’s win is our fate.

What the US, and the rest of the world is most concerned about is the “free falling” state of global oil prices. Today, oil prices reached a ridiculous US$ 143/barrel, a US$ 3 rise from last week’s price. Markets reacted negatively, with the Dow Jones falling nearly 11 percentage points today. Speculations are rife that crude price could reach US$ 160/barrel, even if Saudi Arabia continues its plan to increase production.

Many analysts blame oil speculators for this rise in oil prices. Many even see these oil speculators using the “Global Warming” scare to justify the increase in fuel prices. With the purported “depletion” of oil reserves around the world, speculators have created a scenario where they justify oil as a threatened or “rare” commodity, hence, rising price of resources to satisfy demand.

World leaders and CEOs are now meeting as we speak in Europe at the World Petroleum Conference. The meeting aims to address key issues such as this affecting the global oil economy. However, many are pessimistic since oil-producing countries such as Iraq continues to reject foreign oil contracts. Also, many oil companies have decreased oil exploration activities due to economic pressures. So, we may still expect oil prices to go up in the next few months. Analysts say, we would probably see a US$ 160-200/barrel price of crude in December 2008.

Analysts are also looking at the dismal performance of the job market in the US. Siemens, one of the world’s largest companies, have announced the lay off of more than a thousand workers. Other smaller and medium-sized companies have also announced job cuts. This could lead to a sharp rise in unemployment rates in the US, expected to double digit by mid-August.

Lastly, inflation seems pretty vulnerable now with food prices reaching ridiculous levels. Analysts blame food speculators, even noting those based in the Philippines. A recent news report says that the Philippines actually created an artificial increase in the price of rice with its international bidding. Inflation could reach double digits for both the US and the Philippines by August or by mid-September. I am not surprised if it already reached double digits for the Philippines.

What government should do at this point is implement a contingency plan. Safety nets should be implemented to protect critical sectors of the economy. I believe the Philippine economy is not resilient enough to weather an Asian financial crisis similar to the late 80′s. If this is the case, then, short-term solutions should be done, like targeted financial assistance to would-be hardest hit sectors. Export industries are extremely vulnerable at this point and government should be particularly attentive to their needs. Likewise, manufacturing and the services sectors could also be affected by the worsening US recession.

Lastly, government should fast-track the implementation of Salceda’s Noah’s Ark plan. Some of us would probably think this is just a dole-out, but a similar program succeeded in arresting the economic slide of Malaysia, Thailand and Singapore. Government should protect the further deteriorating state of almost 5 million poor families, especially in the National Capital Region (NCR) to (1) prevent social unrest caused by economic difficulties and (2) enable the economy to still float and survive this slowdown of the global economies.