$123

Expect pain at the pumps in the next few days. International prices for crude oil jumped up to $123 per barrel this week.

Two factors heavily influenced the price spike.

The European Union (EU) decided to ban Russian oil delivered by sea as additional sanction against Putin’s invasion of Ukraine. That covers about two-thirds of Russian oil imported by Europe. Russian oil exports account for 27 percent of total EU oil imports.

China began relaxing mobility restrictions imposed on the people of Shanghai. With a population of 25 million, China’s wealthiest city is larger than most countries. Relaxed restrictions translate into an uptick in demand for fuel.

There is probably a third factor influencing the oil price spike. June is the peak summer driving season in the rich northern economies. More people on the road translate into greater demand for fuel.

With less Russian oil available to the global market, supply pressures will tend to push prices up. The upward pressure will also affect natural gas prices. Europe relies on Russian gas for 40 percent of its requirements.

Europe is paying a high price for the sanctions imposed against Russia. For Europeans, however, it is a price worth paying to defend the rule of law among nations. They are consoled by the thought that the pain is greater on the Russian side. Moscow earns over $400 billion a year on its oil and gas exports – money that supports the Russian war machine and the costly invasion of Ukraine.

As a consequence of the economic sanctions the EU imposed, inflation has risen sharply in Europe. The inflationary spike threatens the EU with recession.

The inflationary trend is aggravated by a rise in food prices. Russia and Ukraine produce about a third of the world’s grain commodities. With Ukraine’s wheat production trapped by Russia’s capture of her port cities, experts have warned about the onset of famine in economies dependent on Ukraine’s agricultural exports.

Driven by sharp spikes in fuel and food prices, the inflationary trend is a global phenomenon. The sanctions imposed on Russia compound problems in the supply chain caused by the pandemic. Lockdowns have limited production of many finished goods.

With looming commodity shortages, several countries have adopted defensive measures. Indonesia has severely limited its coal exports. India and Vietnam restricted rice exports. All these measures are bad news for the Filipino consumer.

We are almost totally dependent on imported oil. We import a lot of rice from Vietnam and India. We import coal from Indonesia. Our supply situation is vulnerable.

The BSP now estimates our inflation rate will climb to between 5 percent and 5.8 percent for May. The kindest we can say is that the inflation rate will be elevated for many months to come.

Filipino consumers must fasten their seatbelts.

Creativity

We may not be able to legislate creativity. But we certainly can legislate a policy framework that supports intellectual and cultural creation.

Earlier this week, both the Senate and the House of Representatives ratified the Philippine Creative Industries bill. It should soon reach the desk of President Rodrigo Duterte for signing into law.

Pangasinan Rep. Christopher de Venecia, chair of the House special committee on creative industries and the performing arts, is principal author of this bill. He was primarily responsible for shepherding this bill through the legislative mill.

De Venecia describes the bill as “foundational legislation” intended to “foster growth, investments and innovation in enterprises engaged in creative industries.” He is hopeful enactment of this bill will help the arts sector recover from the pandemic and become a driver of the economy’s overall growth.

He foresees enactment of this bill would pave the way for broader participation in the Philippine Creative Cities Network (PCCN). A creative cities network is a concept pushed by the UNESCO to encourage institutional support as well as a supportive policy environment fostering creative work. It encourages comprehensive planning and collaboration to foster the growth of creative industries.

Should President Duterte promptly sign the bill into law, de Venecia foresees a national program supporting creative industries could be rolled out by the fourth quarter of this year. Fund for this program should be available in the 2023 national budget.

One concrete program might be the allocation of a “Creative Voucher System” that will provide direct material assistance to enterprises engaged in cultural creation. In the interim, before this draft law is fully funded, de Venecia looks forward to building a database for this voucher system.

While our country does not lack for creative talent across the board, South Korea for instance has been heavily exporting “K-pop” and other cultural forms. This could be because in our case there lacks comprehensive support for creative activity. De Venecia’s bill addresses the problem.

“Cultural creation” could be a slippery concept, however. It could include everything from fusion cuisine to movies. The implementing rules and regulations of the prospective law should set the definitional boundaries.

At any rate, passage of the de Venecia bill will surely bring cheer to the Filipino artistic community. For many years, our artists and “cultural creators” have complained about the absence of state support. Henceforth they might expect direct funding support and a policy environment conducive to establishing enterprises and whole industries built on cultural creation.

Until today, cultural creation received very little enterprise support. From hereon, we could expect the growth of new industries propelled by Filipino artistic genius.

The prospective de Venecia law provides a policy framework for this to happen.