The Philippines has been listed by United Kingdom-based think tank Oxford Economics as among the emerging markets likely to suffer the most from expensive oil.
“Higher fuel import prices will translate into elevated inflation in Asian and European emerging markets where subsidies are low. Inflation via this channel will be most apparent in the Philippines, Thailand, Poland, India, Hungary and Romania,” Oxford Economics head of global strategy and emerging market research Gabriel Sterne and emerging market economist Lucila Bonilla said in a report.
The Philippines is a net oil importer and it was noted that the country would spend about 0.2 percent of gross domestic product on subsidies to sectors most badly hit by costly fuel. The government will give away at total of P47.5 billion in financial assistance to the bottom 50 percent income households, public utility vehicle drivers and agricultural producers.
Oxford Economics added that commodity importers like the Philippines would be “hurt the most” in terms of wider trade-in-goods deficits as expensive oil and other products would bloat their import bills.
The yawning trade and current account deficits partly wrought by expensive oil imports are seen further weakening the peso, which Finance Secretary Carlos Dominguez has recently deemed as remaining within “manageable limits.”
World leaders are preparing for Russia’s war in Ukraine to be a lengthy one, so our country must prepare for fuel prices to remain expensive. Even if the war is somehow ended quickly, our dependence on imported oil is a lingering issue that needs to be addressed. Exploration and development of potential sources of oil and gas has to continue, which is only possible if we can somehow secure our territorial integrity in the face of aggressive Chinese expansion into what should be our exclusive economic zones.
Aside from securing indigenous sources of fuel, we also need to fast track the weaning of Philippine society from its dependence of fossil fuels through the adoption and incentivizing of renewable energy and electric vehicles, as well as shifting the focus of urban planning to building communities that encourage active transportation and lessen private vehicle use.
The absurdly high prices of oil is the most effective wake up call for Filipinos and their government who have been unable to gather the resolve and wherewithal to kick our oil habit. What we do about it now will determine how our future will look like.*