The rise in oil prices is a global phenomenon. Being almost completely dependent on imports for its crude oil needs, the Philippines can only wait for this storm to blow over. Crude prices have soared in recent weeks, hitting a new record high sometimes on a daily basis. And the rise has nothing to do with any acts of the Arroyo administration. The biggest causes were the problems faced by Russian oil giant Yukos, which triggered a speculative frenzy in the world crude market, as well as political turmoil in Venezuela, one of the biggest oil exporters. Apart from these, terrorism, unrest in the Middle East and the war in Iraq had been putting pressure on world crude supply and prices for many months now.
There is one thing the administration may want to do: scrap or suspend the implementation of higher tariffs on crude oil imports. The colossal fiscal deficit is an even bigger headache for the administration, but this is the worst time to raise crude tariffs for those worried about their political fortunes. Suspending the hike will give critics one less factor to blame on the administration for rising pump prices.
Local oil prices, however, are sure to continue rising even without the tariff increase. The government will have to explain to the public carefully why this is happening as it encou-rages fuel conservation measures. For the long term, the government should move to reduce the nation’s dependence on crude oil. Alternative energy sources such as geothermal power and natural gas must be developed. Extensive research on alternative fuels must get government support, including those that at this time may sound bizarre such as ethanol and coconut oil. Meanwhile, we can do with less political grandstanding and knee-jerk proposals.