Lasting solutions for oil volatility
Not long after the United States and Israel launched a joint attack on Iran and plunged the region into a raging crisis, President Marcos last week ordered the shift of government offices to a four-day workweek as one of the immediate measures to cushion the severe impact of skyrocketing oil prices.
Local government units across the country have followed suit–Negros Occidental, Laguna, Zamboanga del Sur, and the cities in Metro Manila among them.
The Supreme Court did too, as well as the Department of Education, which allowed its nonteaching personnel to go onsite for just four days a week starting March 9, with Friday designated as the common work-from-home day for all covered personnel.
With fuel prices seeing their biggest single-week hike this week by as much as P38.50 a liter as global market prices breached the $100 a barrel mark, the clamor is growing for more institutions and the private sector to follow suit.
Bottom line is that the people need immediate relief from the pain dealt by rising oil prices and the people who have already been struggling to cope with elevated prices of basic commodities deserve no less.
Long-term solutions
The increase this week is huge, after all. Diesel prices are poised to go up by a cumulative P24.25 a liter, while gasoline will be more expensive by P7 to P13 a liter starting March 10. Kerosene, meanwhile, which is mainly used for cooking, will be more expensive by P32 to P38.50 a liter.
Private companies have been urged to consider adopting the government’s four-day onsite work week, or at the very least, implement staggered work-hour schemes to cushion the impact of fuel price hikes amid escalating military conflict in the Middle East.
Sen. Francis Escudero said the alternative, flexible work arrangements would not just provide workers added relief since they will save themselves the cost of transportation for at least one day a week, it will also help reduce the economic cost of traffic congestion. He urged the private sector to follow suit.
These are but temporary measures, however, and more long-term solutions should be considered. Forging supply agreements with alternative sources and lessening dependence on imported oil are the way forward.
Indeed, the Philippines immediately feels the impact of any volatility in the restive Middle East as it imports almost all of its crude oil requirements from the region.
Energy security
And the impact is not just felt at the pump, it will eventually find their way into the entire economy through higher transportation, shipping, logistics and manufacturing costs, and ergo the cost of basic commodities.
Then the cycle continues as transport companies will in turn demand higher fares, and labor will naturally press for a higher minimum wage–all added costs that will eventually be passed on to consumers as companies and individuals will not be able to fully absorb the immediate shock from the higher costs of basic goods and services. Thus while both the public sector and the private firms ensure that the compressed work week will not disrupt public services nor result in the diminution of benefits and salaries of those who will not go to work on certain days of the week, effort must also be exerted to fortify the Philippines’ defenses against extreme volatility in global oil prices.
The Department of Energy, for example, last year signed eight new petroleum service contracts representing a potential combined investment of around P12 billion over the next seven years.
As Mr. Marcos said during the signing ceremony, the new service contracts represented the government’s “continued efforts to attain greater energy security, and therefore, economic stability and self-reliance.”
Opportunities in crises
Indeed, the latest crisis in the Middle East should serve as yet another warning to the Philippines that almost full dependence on imported petroleum from the region where tensions can easily ignite perpetually puts the Philippines at risk of wildly fluctuating prices that deal an outsized blow on the economy.
But there are always opportunities in crises. To recall, a similar oil shock in the 1970s had pushed the first Marcos administration to prioritize the development of local energy sources, thus leading to the rapid development of sources such as geothermal energy which the country continues to enjoy today.
Perhaps this latest crisis will lead to a similar urgent push to continue developing alternative energy sources over the long term and also diversify sources of crude oil over the short term as a permanent solution to crude oil woes.
As of this writing, crude oil prices have again gone down dramatically to around $85 a barrel after spiking to nearly $120 over the weekend thus the country should see some immediate relief from high prices in the coming weeks.
But then that should not mean a letup on the country’s efforts to make the country more resilient so that future shocks will no longer deal such a heavy blow.
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