Decoupling oil and inflation

We’re tackling two topics for today’s column. The first is about the still jittery movements in crude oil prices, and the second is about the state of our higher education now that classes are decidedly returning to pre-pandemic face-to-face mode.  

More than two years since the global economy restarted after the pandemic lockdowns, the world’s major oil producers are still trying to find their bearing. They’ve been calibrating mainly on how much the oil tap should be tightened to control the world’s oil supply and to keep prices at a certain desired level.

Since peaking at more than $120 a barrel in May 2022, crude prices have been on a steady downtrend to levels much too low for the comfort mainly of OPEC+ members, whose combined output is about 40 percent of the world’s current supply.

Saudi Arabia, which so far has the world’s biggest crude oil reserve, had just announced a one-million-barrel-per-day slash in its deliveries starting July, quickly resulting in a $2 a barrel price upward adjustment on the Asian trading board.

While Saudi Arabia needs to keep world crude price levels at about $80 a barrel to finance its new development projects aimed at diversifying its economy, Russia prefers to keep prices at around $60 per barrel to comfortably deal with a price cap imposed by the Group of Seven (G7).

If the average crude prices fall within Saudi Arabia’s desired levels, Russia would have to resort to stealth, like tampering with tanker transponders to evade tracking their offloads to countries that wish to take advantage of their lower prices.

Fighting inflation

This new crude oil pricing dynamics somehow reassures us that we could be seeing a pricing normalization within the next few years within a closer bandwidth. This will allow countries to focus at growing their economies rather than fire-fighting inflation brought about by high crude prices.

For many countries, inflationary woes have been the result of supply chain problems aggravated by high crude prices starting in 2021. The US, with its high inflation, was particularly concerned, prodding its president to release significant volumes of oil from its Strategic Petroleum Reserve.

While inflation is still on average higher than last year’s, pressures have been easing that forebode a steady reduction in the coming months. This should complement the Philippine government’s other efforts at keeping prices of basic commodities and services within control.

Of course, our inflation woes are still something to anxiously contend with given our current vulnerability on local farms’ impaired food supply capabilities and the shifting landscapes on global food supply chains brought about by wars and weather changes.

As many of other rice-producing countries sound out lower harvests, the Philippines is also grappling with the same problem. A potential shortage in the availability of rice in the global market will only lead to higher prices of the grain, which could be catastrophic for us given our vulnerabilities.

When push comes to shove, our countrymen can do without imported pork and chicken, but it becomes a totally different story when we talk about a rice shortage.

Going face-to-face

Let’s move on to the second topic. This weekend saw the first face-to-face entrance tests by the University of the Philippines (UP) for aspiring college admissions, more popularly known as UPCAT. Modified during the last three years because of the pandemic, the written test this year will once again be considered as basis for admission.

Although there is some debate on whether the college admission tests do make a difference when added to the first three years of grades in high school that an examinee submits, UP is still prized by secondary education graduates as their first school of choice for tertiary education.

UP Diliman, for example, ranks higher than Ateneo de Manila University, a private academy that charges far much higher tuition than what a freshman at any UP branch would need to pay. Students at the UP are often called iskolar ng bayan because their enrollment fees are highly subsidized by the state.

So prestigious is the privilege to be accepted at UP that several hundreds of thousands apply every year for the permit to take the exam, but only about a hundred thousand are allowed. The exams are so competitive, such that only around 11,000 are given the green light to actually enroll.

In Asia, UP Diliman enjoys a respectable place among the top 100 universities, and is the only university from the Philippines. Yes, UP Diliman is still the Philippines’ pride when it comes to higher education.

Default to hybrid

This academic school year, UP professors – albeit reluctantly – are once again conducting face-to-face classes. The consensus is that learning is indeed much better for the student in a physical classroom with the teacher actually present in person by the chalkboard.

Many professors, however, are getting on in age or have co-morbidities, hence a general hesitation to deal with the possibility of being infected by the coronavirus. Others have become more comfortable with Zoom lessons and their prepared PowerPoint lessons.

It’s not just UP professors, but also those from other universities and colleges from all over the country who are questioning a return of face-to-face classes. While it is recognized that education using some form of digital media is plausible, the longer-term effects have not been quantified.

Keeping the quality of our higher education competitive with other countries is of utmost importance, and determining just how hybrid we will allow our colleges and universities to mix face-to-face and digital learning will be crucial to graduates’ competitiveness.

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