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The United States can readily put fear into the hearts of the
stubborn OPEC by undertaking three practical measures:
Release one or two million barrels from their
strategic oil reserve to ease the short supply;
Pass the proposed law that imposes windfall tax
on oil companies (Chevron’s yearly profit is more than the GNP of
an entire slice of Africa) to send the message that profiteering has
its limit; and
Adequately fund research and development work on
alternative fuels to fast-track work in that area and lessen the
demand for fossil fuel.
With all the three done, the US can bring down
the price of crude to less than $100 a barrel overnight. This will
immediately bring relief to oil-short countries.
If it wants to bring greater relief to the
oil-consuming world, the US should do more. It should invoke the
investigative powers of Congress to undertake an in-depth inquiry
into the some shady areas of speculating on commodities,
particularly food products and oil.
It will surely open a can on worms on the
so-called “dark areas” of oil trading.
This expose, will, in turn, rein in the hedging
of fund managers on oil and other vital commodities, which should be
spared from the axis of economic greed.
With trading on oil cut back to rational levels,
oil prices will be pushed down dramatically.
The OPEC will not listen to gentle persuasion.
Neither will it listen to appeal for compassion and understanding.
It will only respond to intrusive actions, such as the three doable
actions cited earlier, which only the US has the power to carry out.
Somebody should do something fast to ease the
surge in the oil prices. In the Philippine context, the price spiral
has taken its deadly toll on a very crucial area—domestic food
production. This is the weak link that everybody seems to ignore but
it is a reality. In several farming areas across the country,
several sub-sectors of agriculture have been crippled by the runaway
prices of diesel.
For every upward jump in the Goldman Sachs
Commodities Index (now estimated to hold more than $200 billion in
funds for trading on oil among other things), tens of thousands
Filipino farmers cease producing food. And are condemned to a life
of misery.
The aquaculture production (tilapia, catfish) in
Central Luzon, once the brightest spot of agriculture there, is a
case in point. A few years back, it was the brightest sub-sector of
agriculture, posting double-digit growth figures. The farm gate of
tilapia and catfish was P55 to P56 per kilo. The price of diesel was
over P20 per liter. The cost of aqua feeds was around P600 per bag.
Aqua farmers posted decent net profit.
The word of that newfound farming prosperity
soon spread out—fast and all over the region. The massive
conversion of former rice and sugar farms into tilapia and catfish
ponds followed.
Now, the once-thriving aqua farmers are gasping
for breath, their last, it seems. The price of diesel is close to
P50 per liter. The current cost of aqua feeds is double the price
five years ago. The farm gate prices of tilapia and catfish is now
down to P52 per kilo The aqua farmers are bleeding and more than
half of the tilapia and catfish raisers have abandoned their farms.
Rice farmers, those relying on shallow tube
wells during summer, have been spooked by the high cost of diesel.
Even the rise in palay prices cannot offset the surge in diesel
cost. Many have limited raising palay to a single crop, the rainy
season harvest, effectively idling their farms one half of the year.
Opportunities to narrow the demand-supply gap in the rice sector are
squandered.
We can just imagine the plight of small
fishermen using pump boats powered by diesel-fed engines. They
venture out into the over-fished waters and return home with a
meager catch, not enough to offset the diesel consumption and buy a
few kilos of rice. There is only despondency and desperation in such
areas.
While the Goldman Sachs Commodity Index posted a
meteoric rise—some $18 billion five years ago to its more than
$200 billion now—from trading on oil and food commodities,
Philippine rural and coastal areas living off farming and fishing
are dying slow deaths.
Whenever the Goldman Sachs trading floor is
seized by fits of frenzy due to overheated oil prices, a part of the
rural Philippines is sapped out of its productive vitality and
withers away.
mvrong@yahoo.com
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