World oil prices on the way up

- Boo Chanco -

The New Year is just a week old and a whiff of unpleasant news is in the air. According to the Fast Money section of CNBC, the all business news cable channel, they are taking note of a bullish oil prediction that could see the price of crude oil hit triple digits. CNBC was actually citing a Bloomberg interview with the widely followed economist Jeff Rubin who predicted “it’s safe to say that we’ll see triple-digit oil prices by the fourth quarter of this year.”

“This time we can expect oil prices to rise and continue rising,” he added. And he expects prices to move pretty close to $100, and be in the $90 range as soon as the end of March. CNBC notes that Rubin in 2007 accurately forecast that oil prices would skyrocket. The price of oil hit $147 in July 2008 sending prices at the pump well over $4 a gallon.

CNBC then reports that their own oil expert, Fast Money trader Joe Terranova says much the same. “If oil doesn’t hit $100 this year, I think the equities markets will have a bad year. Personally, I think oil goes above $150 in the next 3 years.”

This could not happen at a worse possible time for us. We will be in the midst of an expected bruising presidential campaign season and rising oil prices will force even the most circumspect political leader turn street style populist. Hopefully, that would not make us turn to knee jerk measures that we will regret later on.

This early, the government’s crisis committee should embark on a strategic planning exercise to see what could be done to mitigate the impact of rising oil prices. Resorting to price control whether for oil or other prime commodities will just make the situation worse as goods start getting scarce in the market. As we all saw when they tried to put a cap on gasoline prices, shortages started to happen as importers naturally refused to import oil products at prices higher than the price control ceiling.

I can sympathize with the problems government must face in the light of world market movements. The earning capacity of our people has remained static or even declined in recent years. We have a pretty significant number of people unemployed or underemployed. The hunger rate is rising. And any price hikes will just heat up the political environment.

Frankly, people must realize that there is little government can do about rising world prices except to check occasional price manipulation and perhaps intensify its conditional cash transfer programs for the very poor. Jeepney driver strikes and similar disruptive mass actions will only make things worse for more people as they suffer loss of income and are unable to earn their day’s living expenses. 

Our heavy dependence on imported oil is our problem. That’s why more than ever, we need a credible energy development program that seeks non oil alternatives that are also locally available.

Maybe government should also stop acting like a partner of OPEC by collecting more royalty and taxes on Malampaya natural gas as world market price for oil rises. Giving up part or all of the unusually high royalty on Malampaya is another way of cushioning the impact of an increase in the world price of oil. Our neighbors after all, do not tax domestic energy sources.

It is now time to discuss and prepare on how to respond to the certainty of rising oil prices.


Our Christmas vacation with our children in the US was marred by an unfortunate incident. Our home here was robbed while we were gone. The difficult part about it is that the crime involved our trusted maid… it was such a letdown. We warned her about such common tricks like that perpetuated by so-called “dugo dugo” syndicates but that was exactly what she claimed she fell for.

Someone called, our maid told us, telling her that we were in an accident and needed money urgently, disregarding the knowledge that we were abroad. She said the caller instructed her to break in to our room and the drawer where some valuables are kept and that was exactly what she did. Despite very clear instructions not to leave the house ever while we were gone she went off to hand over some money, credit cards and jewelry to somebody in Balintawak.

We were in constant touch with her through our VOIP phone but she told us nothing until a day after the incident. We had to immediately call the bank to cancel the credit cards within the hour we learned of the incident. But it was not early enough to stop the use of our cards. In fact, soon after we reported it to the bank, a woman was caught in a Mercury Drug branch in Malabon trying to use my wife’s card.

The police officers that arrested the woman told us that a syndicate must be involved because a lawyer was almost immediately at the police station ready to bail her out. The woman also used a fake driver’s license of my wife with just about the same details as in her license except that the photo was changed. They also found a PRC medical license in my wife’s name which is obviously a fake because my wife is not even a doctor. Even fake licenses, the police told us, take time to produce unless the whole thing was planned by a crime syndicate much earlier. The Libis police investigator also doubt the story of our maid.

I am only writing about this now because the unfortunate incident gave us an opportunity to directly interact with our local police as victims of crime. I just want to use this opportunity to thank the police officers, PO3 Rogelio Basbas Jr. in Libis and PO2 Rommel S. Habig in Malabon, and commend them for their professionalism amidst difficult working conditions.

My wife was particularly impressed with how the investigators in Malabon are coping with an obvious lack of personnel, high work load and lack of adequate facilities. The Libis police station is new and the police officers there seem motivated by their much better working environment. They are what we think our police officers should be but didn’t earlier think they could be. Officers in both police stations did their uniform proud.

I think our police officers could perform their functions better and the national police can get a better public image if their generals in Crame spent more of their budget in upgrading facilities out in the field. We are in the cyber age but most police stations still use those old Remington typewriters to make their reports.

In Malabon, they are using very old computers with flickering monitors and dot matrix printers. Libis, being a new outpost, has pretty modern computer facilities. If we want effective police work, all police stations must be connected to each other with an online system that will enable them to easily check records of criminals and suspects and post timely alerts on new crime. A working online system should improve coordination too.

In my column last week about the apparent low crime rate in the US despite the recession, police officers and academics there attribute it partly to the intelligent use by the police of computerized resources. Maybe, instead of getting large sums of money from their budget to fund foreign excursions of police top brass and unexplainably losing millions of pesos worth of euros in the process, such funds should be redirected to update the crime fighting capabilities of our police. I understand that some of our police officers do not even have guns.

We expect much from our police. We should give them the resources to get their job done.

Pinoy joke

 This one was sent in by Ed Umali.

May dalawang lalaki sabay nag jogging:

Guy 1: Pare, doctor akoKaya ako tumatakbo kasi HEALTH conscious ako! Ikaw pre?

Guy 2: Snatcher pre! WEALTH conscious ako.

Boo Chanco’s e-mail address is [email protected]. This and some past columns can also be viewed at www.boochanco.com










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