Thursday, March 3, 2011

Doom and gloom for Filipinos: unemployable refugee OFWs and rising energy costs

So much poetry was waxed as Filipinos, harbouring presumptuous paternalistic sentiment, doted upon the supposedly fledgling "people power" revolutionaries making waves in the Middle East. Trouble is, reality crept into the picture beneath the lines-of-sight of the chattering classes. That the livelihoods of a horde of Overseas Foreign Workers (OFWs) deployed there were at risk was an obvious reality that simply flew over the heads of would-be Filipino poets. That reality is now bearing down on the hapless little islands nation of 100 million as it faces the virtually impossible task of absorbing an additional mass of tens of thousands of warm bodies into its flaccid domestic economy.

The other obvious waiting-to-happen whammy that escaped Filipinos' atrophied faculties for foresight is their dependence on Arab oil.

The global energy market is beginning to reel from the effects of both the disruptions in production in Arab kingdoms teetering on the brink of civil war, and the continued spread of this malaise to other desert kingdoms there anticipated by speculators. Already there are doubts that supply shortfalls can be compensated for by other oil producers simply cranking up their production -- and that is a bleak scenario foreseen even while assuming that the spread of "people power" politics across the rest of the Arab world can be averted...
Jeffrey Brown, a Dallas-area petroleum engineer, questions the assumption that the Saudis can meet the world's needs.

He notes that Saudi production has declined in three of the four years since it peaked at middecade – including an 11% plunge in 2009. At the same time, Saudi oil consumption has soared, making it the 15th-biggest petroleum consumer as of 2008, according to U.S. government data.

Brown estimates Saudi consumption will hit 3 million barrels a day this year – up 50% from 2005. Every barrel consumed at home is one the Saudis cannot export to fill booming demand for fuel.

That means the Saudis will have reverse years of decline and, indeed, set new production records just to bring their exports back to levels regularly seen during the good old days of the middle of the past decade.

In order to simply match their 2005 export peak of 9.1 million barrels a day, the Saudis would have to pump 12.1 million barrels a day in 2011. That's almost 10% above the kingdom's highest output for a year.

That is a pretty big order to fill, with no particular sign that the Saudis can fill it. Those numbers seem to point toward higher oil prices, which is not good news for a weak U.S. recovery predicated on strong global growth.

China with its centralised command economy is in the best position to act swiftly. Like it did with its stash of cash during the 2007-2008 global financial meltdown, China has the ability to centrally fix, channel, and secure its energy supply from the perspective of the big picture regarded from the eyes of just a handful of powerful economic architects.

So as supply peaks and demand grows, simple supply-and-demand economics kick in -- prices go up.

Unfortunately Filipinos fail to grasp this simple principle, preferring instead to blame movements in price to "greed"...
Groups like Kilusang Mayo Uno (KMU) are urging President Benigno Aquino III to “step into the pricing of oil with the goal of reducing prices and moderating the greed of the oil companies.”

KMU said that oil firms in the country were using the political turmoil in North Africa and the Middle East to justify the huge increases in the prices of their products.

“We demand that the government junk the Oil Deregulation Law and control oil prices, as well as remove the value-added tax on oil products,” KMU said in a statement.

Other countries act while others blame. Perhaps this difference in attitude is what separates the men from the boys -- those who prosper from those who habitually fail.

Rising energy prices and increasing warm bodies to employ -- where is the Philippine economy headed? "People power" politics, populist sloganeering, and prayerfulness simply no longer cut it. Filipinos need to consider facing their challenges with modern thinking instead of the traditional primitivist approach to regarding issues they have for so long been comfy with.

1 comment:

  1. I wonder what the KMU will do once oil reaches $200 per barrel? Another rally? What the fuck will that do?