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It Came Rushing In

account_balanceMetro Opinion account_circleLeigh Bellosillo chat_bubble_outline0 Comments

The Philippines is, on a total straight line, 5,132 miles away from Moscow based on distancem.com. It’s roughly four round trips from Manila to Davao and vice versa. Ukraine, on the other hand, is 5,464.3 miles away. Pictured graphically, it’s about three round trips from Manila to Zamboanga.

Though far away, the fall-out has already reached our shores with the gasoline prices going like crazy. One day it’s up, the next day it drops. Still, the speculation is for the crude oil per barrel to fetch $200.

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The ill effects of the siege have reverberated throughout the global financial market. And, it reached our shores. It came rushing in as seen by the waves of increases in domestic pump prices of petroleum products. We, the consumers, are already feeling the brunt of the Russia-Ukraine conflict.

The expectation is the domestic price of gasoline could reach P100 per liter. We have to brace ourselves for another round of oil price increase.  The oil price is expected to sustain uptrend due to the escalating tension.

It could be a never-ending process, especially with summer just around the corner. That said, demand for electricity, on a seasonal basis, would be up, which will trigger an increase in the cost of power.

In the meantime, the peso is losing some of its value. The assumption is for the peso to depreciate to P53 a dollar. This may mean a good amount of money for the beneficiaries of overseas Filipino workers, on one hand. On the other hand, it could fuel inflation, or the cost of living as commodity prices would rise as fear grips the West. Thus, whatever gains received is eaten up by rising cost. 

With the skirmish escalating, the expectation for the coming week is there’ll be another increase in pump prices by as much as P10 per liter. This situation is reminiscent of the past oil crises.

For a little bit of history, let me fill you in on this, especially the millennials. Two oil crises occurred in the 1970s: the first worldwide oil crisis was in 1973 at the height of the Arab-Israeli War with the Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposing an embargo against the US in retaliation for the US decision to re-supply the Israeli military and gain leverage in the post-war peace negotiations. Oil prices then surged by 400 percent.

Second was in 1979 caused by the turmoil in Iran, described then as a major petroleum exporting country, that triggered the significant drop in supply and oil prices went up by 100 percent. 

This was followed by the mini-oil shock in 1990. Saddam Hussein’s invasion of Kuwait set off this price shock that lasted for nine months, and historians say the price uptick was less extreme compared to 1973 and 1979. Recently, the energy crisis of the 2000s due to the volatility in the price of oil from an average of $20 to $30 per barrel to around $100.

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Now, let’s go back to reality. While we are mere watchers of the conflict, we all feel and no one is spared by its collateral damage.  


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