Palace should declare a “state of economic emergency” now

It is difficult to comprehend why government has not responded on the call for a “state of economic emergency” amid unprecedented oil price surges due to the Russia-Ukraine war. It is also unclear on whether Malacañang would convene Congress into a special session to enact much needed legislations to counter the incoming tsunami of second-effect price hikes.

BSP governor Benjamin Diokno Jr. believes our strong macroeconomic fundamentals could insulate the domestic economy from the war’s effects and our three percent inflation rate is within the two-four percent government target. He says if oil prices hit $140 per barrel and stay there, it will go up a manageable near five percent or at 4.7 percent local inflation.

TUCP has proposed an outrageous P470 additional daily from the current P537 or a total of P1,007 for the more than five million minimum wage workers in Metro Manila, who dropped from the category of low income to “newly poor”. However, business groups believe this would trigger a dangerous wage spiral and damage the economy. Expect fiery discussions in the regional wage boards.

On Monday, March 14, pump prices are at P72.88/L for gasoline, P64.50/L for diesel, P66.31/L for kerosene and P96.67/kg for LPG. These are based on Dubai crude (MOPS) pricing at $120.34 a barrel and still going up.

Today, March 15, Caltex Philippines and Cleanfuel will implement new price increases, diesel is up P13.15/L, gasoline by P7.10/L and kerosene by P10.50/L. These bring gasoline price to nearly P80/L, diesel at P77.65/L and kerosene at P73.41/L.

The Department of Energy says if Dubai crude price further soars and hits $140/barrel, gasoline could become P86.72/L, diesel at P81.10/L, kerosene at P80.50/L and LPG at P119.53/kg.

So when will this stop?

While oil trading today are hitting $120 to $130, there was a drop of $8 on West Texas Intermediate (WTI) crude and $8 as well on Brent crude. Analysts are saying world oil prices will return to $40-$50 a barrel with US and Canadian oil replacing the internationally banned Russian supply, the third largest in the world. Whether this decrease of oil prices is temporary or permanent, nobody can say because the Russia-Ukraine problem worsens daily.
There also reports of an ongoing world supply problem in diesel even before the invasion. Diesel inventories had fallen to previously low levels in 16 years. European diesel prices surged to record high $1,500 per metric ton and now face shortages, aggravated by the disruption of imports from Russia. Are we ready for diesel fuel rationing if it happens?

House tax chief Rep. Joey Salceda says that if global uncertainties continue and the price of WTI crude reaches $185/barrel, diesel will be at P135.60/L, kerosene at P129.30/L and gasoline would hit an unbelievable P145.30/L, nearly four times its price last January. These, he says, are projections from the renowned financial group JP Morgan.

Can our people afford that P145.30/L of gasoline? Or P135.60 of diesel? Unimaginable chaos exactly. Today, it is already very unsettling that in less than three months, current pump prices are already more than double their prices.

So far, what do we hear from government? They talk of fuel subsidies, P6-B for PUVs, fishermen, farmers, and even delivery riders. P6,700 for more than 337,000 jeepney, bus, taxi, delivery drivers, and the LGU-supervised tricycle drivers.

Food prices will increase such as rice, corn, pork, fish, chicken, sugar and bread and once again, man-made supply disruptions will happen. And as usual, price manipulators, profiteers and hoarders will remain unstoppable. No thanks to DTI and LGUs.

I think that supply, supply, supply of the people’s basic needs must be top priority. Government must ensure the availability of food, electricity, oil, and other needs amid expected world shortages. And please, do not expect too much on other countries to help or export food to us because they are also fighting for survival.

Perhaps, it is wise for President Duterte and the Cabinet at this point to declare a state of economic emergency preparedness, if they don’t like Salceda’s idea. But really, we must anticipate worst-case scenarios. Personally, I think it is high time to fully activate a food security summit with LGUs as implementing agency, “ayuda again to the poorest of the poor”, and a “transportation summit” for a fuel rationing scenario.