Oil makes the world go round or kaput

It was during the 1973 Yom Kippur War in the Middle East between Israel and its Arab neighbors when the world first experienced the shocking reality of an oil supply shortage. The Arab oil producing States were angered by US support for Israel and decided to express their wrath by shutting off the oil spigot. A world petrol crisis followed.

We were under martial law then. To be able to ration the low supply of petrol, the Marcos government had to issue ration coupons to motorists. You could not exceed your allocation per month, per vehicle. That compelled folks to really plan their trips - not a bad idea, come to think of it. Having the coupons did not solve your problem because you had to find a petrol station with the supply to sell.

In many instances, the short supply of petrol forced the imposition of a limit to the amount of fuel that a vehicle owner can load from a petrol station. Many motorists, especially those with long trips to take, had to spend hours moving from one petrol station to another just to be able to get their desired full tank.

With People Power fever currently raging in the Middle East, with a major oil supplier, Libya, now hardly producing and delivering because of the turmoil there, with possibly more Middle East oil producers suffering similar delivery interruptions because of political tensions — there is no predicting at this point just how severe this looming petrol crisis will be.

We here are already considering possible petrol rationing if the supply is really drastically reduced. Already, we are feeling the effects of a runaway escalation of petrol prices. Acquiring the supply at any price had become the national priority over acquiring cheaper oil. We cannot avoid the law of supply and demand. We are forced to pay the price per oil barrel that other, richer countries are willing to pay or else all petrol dependent transport and commerce here will grind to a halt.

Together with the skyrocketing oil prices, the prices of prime commodities will rise concomitantly and with it we will have uncontrolled inflation. We will be dragged into a vicious cycle where prices are going up while our purchasing power is going down. There is no predicting the extent of the drop in gross domestic product and the extent of political instability the situation will spawn. There is no predicting the number of jobs that will be lost or the number of business enterprises that will close.

In a way, we can be thankful that we’re being confronted with this crisis during the reign of President Noynoy Aquino (P-Noy), a widely trusted and popular president. Imagine how much more magnified the risks will be if we were still under the Gloria Macapagal Arroyo (GMA) regime. People are better disposed to accept unforeseen and uncontrolled developments, especially one that is externally induced, when they trust the man at the helm of the Ship of State.

If we were still under the GMA regime, people might even think that the skyrocketing commodity and petrol prices could be the result of somebody close to the GMA regime who is making a profit out of the crisis. Many folks believed this was happening when we were then undergoing a rice supply shortage. The same folks will be inclined to believe that the profit taking merely shifted from rice to petrol.

This looming oil supply and price crisis heightens the tension between the US and China over the oil deposits in the South China Sea — believed by experts to be as much the oil reserve of the second to the fifth top oil producer. In a world fast running low on fossil fuel, that energy deposit is worth fighting for.

Filipinos should realize the strategic role that our country plays in this tension between the US and China for the oil and gas in the South China Sea. That accounts for the unusual US interest in promoting that aborted Bangsamoro Juridical Entity. Having failed before, it does not mean that the US has altogether abandoned its interest to create a virtual Muslim State in Mindanao from where they can operate against China.

Acting Foreign Affairs Secretary Albert del Rosario announced last Thursday the three pillars of Philippine Foreign Policy — national security, economic diplomacy and the promotion and protection of overseas Filipino workers abroad. Acting Secretary del Rosario mentioned that the US will continue to be the “sole strategic partner” of the Philippines.

Is the Philippines abandoning the GMA regime’s attempt to strike a balance between the US and China and thus benefit from both? Are we renewing our rocky and often one-sided relationship with the US? The US had sponsored the Marcos dictatorship when it suited their geopolitical objectives in the early 1970s.

The US debt has ballooned to the size of the US economy. Even the US National Intelligence Council admitted in its 2025 Global Trends Report that China is set to overtake the US already. Aren’t we betting on a dead horse?

*      *      *

Chair Wrecker e-mail and website: [email protected] and www.chairwrecker.com.