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WITH oil prices hitting new highs almost every week, expect local
gasoline prices to adjust upward almost every week too.
Steep gasoline prices, however, seem like small
pain compared to the harm record high crude prices will do to many
Filipinos. Millions will be impoverished. Those who are barely
middle class will fall to the edge of poverty.
In the interim, there will be long lines of
people wanting to buy cheap rice. Malnutrition will worsen, as will
mass hunger. Dropping out of school will be fashionable. The result
is social unrest never seen in the last 30 years. Food riots could
erupt in some urban places in the country where so-called informal
settlers are dominant. Boycotts over high-priced bus and jeepney
fares can be expected.
“Surging rice and commodity prices in the
region are posing a risk of social unrest and higher production
costs,” the World Bank said in a study, Global Development Finance
2008.
The bank said the surge in commodity prices over
the past six to nine months—especially of food—has pushed
inflation higher and sparked concerns about its adverse effects on
the poor
Two major shortages are devastating millions of
Filipinos.
The most severe rice shortage in 30 years will
cause malnutrition, hunger and mass poverty. The highest crude oil
prices ever will finish off what the rice shortage doesn’t,
meaning bring even greater number of Filipinos to the brink of
poverty.
Together, the food crisis and the energy crisis
will create hardships and privation never seen in a generation. One
form of hardship is inflation which surged to 9.6 percent in May
from 8.3 percent in April this year.
On June 10, the Alexei Miller, the head of
Russian energy giant Gazprom, warned that the price of oil is likely
to hit $250 a barrel. He didn’t say when the surge would come.
“Now, the price is going to reach a level
never-before-seen. The perspective will be $250 per barrel of oil
and the competition for this resource will be strong,” Miller
said.
Miller said that while speculation had played a
role in oil prices, “this influence was not decisive.”
Goldman Sachs had earlier predicted oil could
reach $150 this year and $200 per barrel by 2009. Oil and gas
industry experts think oil could hover between $180 and $200 per
barrel in the next four years.
The National Economic and Development Authority
(NEDA) has conceded that surging oil prices could reverse gains in
eradicating poverty—if oil goes past $200 per barrel, as many
analysts predict it will happen by next year.
And many once rich families will feel very poor.
They may have to give up some of their so-called luxuries—like
driving the kids to school or driving oneself to office.
In a recent media presentation, acting
Socioeconomic Planning Secretary Augusto Santos said the increase in
oil price would primarily affect expenditures on fuel,
transportation cost, and other household expenses, in general.
The government had hoped to reduce poverty
incidence to as low as 17 percent of Filipino families by 2010. This
may now be derailed, given the record high prices of rice and oil,
and the inflation spiral the rise brings about.
The latest government report on poverty
incidence said 26.9 percent of Filipino families in 2006 fell below
the poverty line, as they failed to meet the minimum income required
to meet their basic daily needs. The poverty level in 2006 was worse
than the 24.4 percent poverty incidence in 2003.
The Arroyo administration had committed to
eradicate extreme poverty by 2015 as part of its Millennium
Development Goals (MDG).
She was hoping to trim the figure to a range of
17 to 20 percent by 2010 as part of its commitment to the Millennium
Development Goals set by the United Nations. UN member-countries
have committed to eradicate extreme poverty by 2015.
“We might have to revise the target on poverty
reduction to take into account changes in macroeconomic
assumptions,” NEDA Director General Augusto Santos has said.
The government’s economic team has revised its
growth projection for the economy this year from between 6.3 percent
and 7 percent, to between 5.7 percent and 6.5 percent.
“Considering a baseline oil price of $90 per
barrel and no change in average family income since 2006, families
in the first to third deciles would register negative average family
savings,” Santos estimated. But crude is on the way to $200 per
barrel.
Families belonging to the first decile are the
poorest 10 percent, while the wealthiest belong to the 10th decile.
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