Oil Price Tsunami: Drowning the Poor in Harder Times

0

FILE PICTURE

MANILA, Philippines––The relentless rise in oil prices is having a “negative” ripple effect, especially on commodities and services––which is why the poor have always been hardest hit.

The Anakpawis party list, which represents peasants, workers, fishermen and the poor, said the “endless treks” have sunk poor Filipinos who are still recovering from the economic shutdown caused by COVID-19 lockdowns. 19.

While the government has said the effect of rising oil costs on the prices of commodities and services will only be felt after three months, in hindsight a spike has always hit the poorest.

RELATED STORY: Cusi: Gasoline prices can reach 100 pesos per liter according to the world market

Last year, representatives from the progressive Makabayan bloc tabled House Resolution No. 2310 calling on the government to address the severe effects of rising oil prices on commodities and services.

This is when the costs of diesel, gasoline and kerosene increased by 1.5 pesos per liter, 1.8 pesos per liter and 1.3 pesos per litre. This week, when a barrel of oil now costs $139, the rise could be as high as these:

• Diesel fuel: 11.75 P to 11.95 Pla per liter
• Petrol: 6.90 to 7.20 peso per liter
• Kerosene: P9.70 to PZ9.80 per liter

READ: Double-digit fuel price hike expected this week

In this article, INQUIRER.net will explain how rising oil prices will hit hard – rising inflation, changing suggested retail prices (SRPs), higher tariffs.

Rise in inflation

The Philippine Statistics Authority (PSA) said inflation last month was 3%. This was due to a drop in “food inflation” – from 1.6% to 1.1%.

Benjamin Diokno, Governor of Bangko Sentral ng Pilipinas (BSP), told the ANC on March 1 that the rise in oil prices is likely to push inflation beyond BSP’s target in the second quarter. CLSA Philippines said inflation could reach 5.5% to 6% in the coming months.

Diokno said rising oil prices, particularly from the conflict between Russia and Ukraine, would affect local costs and could cause inflation to rise above the 2-4% forecast by BSP this year.

GRAPHIC: Ed Lustan

RELATED STORY: Putin’s War on Ukraine and Its Impact on PH Prices

On March 8, Albay representative Joey Salceda told One News that if oil prices continue to rise, the cost of living in the Philippines could soon become more expensive.

The daily minimum wage in Metro Manila, as set by the National Wage and Productivity Commission, is P537, while the daily minimum wage outside the metropolis averages P290-420.

Although this is already not enough, especially compared to the “family living wage” of 1,072 pesos in Metro Manila, Salceda said the real value of the daily minimum wage could be as low as 234 pesos at 464 pesos when adjusted for inflation.

GRAPHIC: Ed Lustan

He said earlier that President Rodrigo Duterte should call a special session of Congress by Tuesday (March 15) if the cost of oil is still above $100 a barrel, saying rising oil prices will certainly hit Filipinos.

Higher SRPs?

For Commerce Secretary Ramon Lopez, while there should be no changes in commodity prices for now, the possibility of adjusting PRSs should not be ruled out.

He told Dobol B TV on February 23 that high oil costs will hit industries that are heavily dependent on oil in their operations, saying it will also affect farmers and fishermen.

GRAPHIC: Ed Lustan

The PSA said last year that oil resources had the largest share of 0.19% in the “non-renewable energy resource rent as a percentage of gross domestic product” from 2000 to 2019.

Lopez explained that oil’s contribution to the “cost of manufacturing” is five to seven percent. With high oil prices, an increase of 3 to 3.5% in the cost of production is expected.

As the rise in oil prices, now in its 11th consecutive week, has pushed up the cost of production, Lopez said it could be passed on to Filipino consumers.

GRAPHIC: Ed Lustan

He stressed, however, that the Ministry of Trade and Industry will consider both rising oil costs and production costs, such as raw materials and logistics, when deciding whether there will be a change in the PRSs.

To get a sense of the cost of commodities now that the effect of higher oil prices is yet to be fully felt, here is a list from the Department of Agriculture of prevailing retail prices in the metropolitan area of Manila:

• Rice

1. Special imported commercial rice: P50/kg
2. Premium imported commercial rice: 46.50 PPP/kilogram
3. Well milled imported commercial rice: 42 P/kilogram
4. Special local commercial rice: 50 P/kg
5. Premium local commercial rice: P45/kilogram
6. Well-milled local commercial rice: 40 P/kilogram

• Fish

1. Bangus: P160/kg
2. Tilapia: 120 P/kg
3. Galunggong: P240/kg

• Livestock and poultry products

1. Beef rump: P400/kg
2. Beef brisket: P350/kg
3. Kasim Pork: P330/kg
4. Pork Liempo: 370 P/kilogram
5. Whole chicken: P170/kg
6. Egg: P6/piece

• Vegetables

1. Cabbage: P60/kg
2. Carrot: P100/kg
3. Baguio beans: 100 P/kilogram
4. Ampalaya: 120 P/kilogram
5. Green beans: P80/kg
6. Squash: P40/kg
7. Eggplant: P80/kg
8. Tomato: P80/kg

• Spices

1. Local red onion: P80/kg
2. Imported red onion: 45 P/kg
3. Local garlic: P300/kg
4. Imported garlic: 120 P/kilogram
5. Ginger: P120/kg

• Others products

1. Refined sugar: P65
2. Brown Sugar: P50
3. Palm oil: P40/P350ml
4. Palm oil: P100/1 L
5. Coconut oil: P40/P350ml
6. Coconut oil: P120/1 L

This, as Anakpawis stated, there was an 11-14% increase in the cost of food from 2019 to January 2022. The increase was highest in Central Visayas at 14%, and in the region of Calabarzon and Bicol with 13%.

Tariff increase

As jeepney drivers were also affected by rising oil prices, they petitioned the Land Transportation Franchising and Regulatory Board (LTFRB) to raise the minimum fare from P9 to P15. The LTFRB has yet to hear the petition.

RELATED STORY: Government ready to raise tariffs as fuel prices rise

“The ever-increasing rate of inflation, which drives up the prices of basic commodities, has pushed the PUJ actors to the limit and can no longer provide 3 times a day of meals to their respective families.”

La Liga ng mga Transportasyon at Operators sa Pilipinas said this forced them to ask for a “conservative fare increase” of P15 as the minimum fare for the first 4 kilometres.

GRAPHIC: Ed Lustan

READ: LTFRB: Minimum fare remains at P9 for now; offer to increase it to P10 until decision

For now, however, the LTFRB said the minimum tariff would remain the same. He also warned that drivers charging passengers more P9s could face fines of thousands of pesos.

READ: LTFRB warns jeepney drivers who can’t wait for fare hike

With oil prices rising, 1-UTAK chairman Vigor Mendoza’s attorney told dzBB that some jeepney drivers are now planning to stop the roads by Tuesday or Wednesday.

“There will really be drivers who still stop working. It’s not that they’re protesting or anything, but they’re really not making any more money,” he said in Filipino.

Government subsidy

The Ministry of Budget and Management has already released 3 billion pesos for fuel subsidy programs –– 2.5 billion pesos to the Ministry of Transport and 500,000 pesos to the Ministry of Agriculture (DA).

The LTFRB said more than 377,000 drivers of public utility vehicles – jeepneys, minibuses, UV express, taxis, tricycles, TNVS, motorcycle taxis and even delivery services – are expected to receive 6,500 pesos in subsidy each.

GRAPHIC: Ed Lustan

The DA also said farmers and fishermen will each get P3,000: “[The amount of] 500 million pesos are now ready to be donated in March. The guidelines, the DA said, are now in “final stages of preparation.”

READ: Fuel subsidy set for agriculture sector; Rise in P3 prices observed

However, Anakpawis pointed out that since last year, there were an additional 16,620 pesos in the drivers’ two-month expenses for diesel; 7,500 pesos of farmers’ expenses for land preparation and irrigation; and 9,000 pesos for fishermen’s expenses.

As he launches a week-long protest, Anakpawis said he would fight for the suspension of VAT and oil excise duties.

READ: Lift excise tax on petroleum products amid soaring prices – Hontiveros

RELATED STORY: P600-M Supplemental Fuel Subsidy for Farmers and Fishermen

TSB

Subscribe to our daily newsletter

Read more

Don’t miss the latest news and information.

To subscribe to MORE APPLICANT to access The Philippine Daily Inquirer and over 70 titles, share up to 5 gadgets, listen to news, download as early as 4am and share articles on social media. Call 896 6000.

Share.

Comments are closed.