In year 2013, global oil prices (West Texas Intermediate or WTI) have been hovering around US$100 per barrel. It went up to as high as US$110.53 in September 6, 2013. It was the highest in over a three-month stretch (from July 3, 2013 to October 18, 2014) when prices went beyond US$100 per barrel. Except for the period April 15 to 23 where prices moved between US$86.68 and US$89.19, the rest of the year 2013, prices were above US$90.00 per barrel. Certainly, these prices will prevail in year 2014 or even higher as the US economy picks up.
In us, nobody wished for it, not even the country's giant retailers since high prices will require more capital. Unfortunately, like an amputee's ubiquitous cane, it will be a permanent fixture in our daily routine. It is simply unavoidable. While its truest impact wasn't fully felt then with a stronger peso majority of the year, this time it might slowly sap whatever is left in one's pocket with our currency slowly sliding beyond P45.00 to a US dollar. So that, their livelihood directly affected, this year, the public transport sector shall surely threaten to hold numerous rallies and strikes to dramatize their demand for a rollback in oil prices and increase in fares. As usual, with the hope of gaining immense popularity, left-leaning cause-oriented groups shall join them and try to make it a political issue.
Actually, oil prices are no political issues and therefore, rallies and demonstrations will never solve this problem. The fact is, even in his greatness, then US President George Bush wasn't able to influence it. In his visit to the Middle East, he tried but failed to convince the Saudi king to increase output in order to lower prices. If he failed, then there is apparently no available reason left for a president from a tiny group of islands in the pacific to successfully influence the global market driven oil prices. Even if granted emergency powers, President Aquino can only institute temporary solutions by cushioning the impact of its rise in the form of duties and tax exemptions.
The reality is, oil prices are a consequence of the interplay between supply and demand. Needless to say, giant oil fields are aging and new discoveries are scarce. Some great oil finds between 1930 and 1960 are more than 40 years old. Some of these oil fields have peaked several years ago and are on the decline in recent years. Even the Ghawar oil field in Saudi Arabia, the world' biggest oil field which was discovered in 1948 has declined in recent years. Though in 1948, its size was reportedly between 66 to 150 billion barrels, and supplied half of Saudi's oil output for decades, the country's production in 2007 dropped by 6% (from 9.15 million barrels per day in 2006 to 8.62 in 2007). Likewise Mexico and China are nearing peak as well. Mexico, the second-ranking supplier to the United States after Canada, peaked in 2004 and is now in steep decline. Experts even boldly predicted that Mexico could be an oil importer by 2015. Likewise, several studies of highly respected geologists have been made. Kenneth Deffeyes for one, said in his 2005 book, Beyond Oil, that in his opinion the peak will occur in late 2005 or in the first few months of 2006. Youngquist and A. M. Samsam Bakhtiari of the Iranian National Oil Company each projected that production would peak in 2007. The more disturbing result from these studies have been the one of the Energy Watch Group in Germany, which recently analyzed oil production data country by country. They also concluded that world oil production has peaked. They project it will decline by 7 percent a year, falling to 58 million barrels per day in 2020. Even if the recent world consumption that is estimated at more than 80 million barrels per day stays, the world will thirst for oil by then. Therefore, oil prices will be unimaginable. Then, forget about travels since airfares will be exorbitantly priced. Demand for cars will plummet. The manufacturing sector will be severely affected. Consequently, unemployment rates will be uncontrollable.
Knowing that the prospect of finding new wells is remote and the quest for alternatives have just started, the immediate solution is demand reduction - a worldwide demand reduction. But with a growing population, that seem impossible. Added to that is the fact that some major power plants are still using diesel and are competing with the other sectors in its procurement.
On the other hand, while respected geologists believed that "it is almost inconceivable now that major fields remain to be found" we are able to find one in Aloguinsan. Though relatively small, it is believed to be commercially viable and could be the "light at the end of the tunnel". Frustratingly, however, while countries like Brazil (which hit one big oil reserve almost ten years ago) rejoiced in its find and hailed it as a blessing, in us (with some of our countrymen's adverse reactions), our find seemed like a curse.
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