Still struggling from COVID woes, Pinoys now dealing with unabated spike in oil prices
Prices of oil have always been volatile. They’d come up and down depending on global supply and demand. So, there wasn’t really anything alarming when prices at the pumps started increasing late this August, and again the week after, and then again after that.
We began to notice the steady rise by the time prices were still increasing by the 4th week. Now, over eight weeks after black gold prices started spiking, it’s all we motorists can talk about now (apart from the rapid reopening of the economic sectors and, ironically, the government allowing more of its citizens to be more mobile again).
Now, after almost two years of staying put at home trying to flatten the curve of the Covid-19 pandemic, we’ve found ourselves trying to flatten another curve, one that if we aren’t successful at doing so, might also end up rendering us homebound.
The timeline of the upward price adjustments of domestic oil products shows that the increases have been quite steep, and as yet unrelenting. By Tuesday, station attendants will need to juggle their fuel displays again to reflect the 9th round of pump price hikes.
Like the pandemic, which health experts surmised could be reined in by vaccines, our government’s energy experts are concocting the equivalent of a “vaccine” by asking Congress to amend the Oil Deregulation Law to provide a framework for the government to intervene and address the global trend, one measure being considered being unbundling the cost of petroleum retail products to determine their true and passed-on costs.
We know for a fact that when fuel prices increase, so, too, do prices of basic commodities. So, the fast-approaching Holiday season will be an interesting study of contrasts—highlighted by an economy opening up with the decreasing rates of daily Covid cases, and a society grappling with the domino effects of skyrocketing fuel prices.
Interesting, too would be the ways in which our commuting masses would cope with the effects of high fuel prices. Will more motorists opt to buy motorcycles, electric vehicles, e-bikes and other personalized modes of transport powered by electricity? Will traffic ease up because less people would drive their cars?
Though there are rumors spreading around that gasoline prices could breach P100/liter, these are just pure speculation, and feeding off of this may actually make the situation worse.
To provide context to the situation, here’s what we do know:
In the DOE letter addressed to Committee on Energy Chair Senator Sherwin T. Gatchalian and Rep. Juan Miguel M. Arroyo, several reasons for the prolonged domestic oil price spike were mentioned. The overarching one, however, was the continuing rise in world market prices resulting from the sudden global increase in demand and an unanticipated lack of supply. The sudden increase in demand was a result of:
(1) The surge of economic activities due to the containment of Covid-19;
(2) The stocking of petroleum products’ inventories as winter approaches to cover demand from October this year to March of next year, with stocking expected until February 2021;
(3) Slowed production due to the current global direction of sourcing energy from low-carbon emitting sources. This has limited the optimum level of production, causing the halt and even the withdrawal of investments in the development and expansion of the fossil fuel industry;
(4) International sanctions to oil-producing countries like Iran and Venezuela that stopped the drilling of oil companies and the buying of oil products from these countries;
(5) Category 4 hurricane Ida that hit the US Gulf Coast on Aug. 29 had caused an estimated loss of US crude oil production by as much as 30 million barrels.
Hold on to your seats for the next couple of months, dear motorists. We still can’t breathe easy. Apparently, the oil industry has been hit by the “long-haul Covid”. Brace for a bumpy ride in our economy.
