From Editorial Today

There is something inherently wrong about the global price of oil, which has been hovering at the $125 per barrel level, more or less.

Economists will say it’s all a matter of supply and demand, but today’s prices tell us that another factor is at play here. Greed. Plain and simply, the oil-producing nations of the world are allowing prices to skyrocket because their profits will run in the billions.

As their prices soar, it is the developing nations which will suffer. No one need be reminded that our motherland, the Republic of the Philippines, is a developing country which is almost entirely dependent on imported oil to keep the engines of its economy moving.

A few days ago, the pump prices of oil were raised by P1.50. This is roughly $0.35, which may not mean much for developed countries like the U.S., which can generally absorb such increases with little more than consumers grumbling about high prices. Back home, the abnormally high prices of oil can be a matter of life and death.

Already, the dominos have started to fall. Since the majority of Filipinos depend on public transport to get around, it is not exaggeration to say that most of our countrymen are already feeling the pinch, which is soon to turn into a stranglehold. The latest increase may be a “mere” P0.50, or around $0.012, but the government has indicated that it was inclined to agree to the latest demand of the transport sector for a P2 hike. This translates to $0.5.

Again, by the standards of the West, the amount is peanuts. But to the average Filipino, every little increase hurts. Belts have to be tightened and sacrifices made. It is hard to say when the breaking point will be reached, but it is safe to say that the Philippines is now closer to that point than before.In a few weeks, classes will be resumed and students will have to pay the higher rates. Naturally, it is their parents who will bear the brunt of the latest rounds of fare hikes. With the prices of oil expected to rise rather than fall in the next few months, warning signals are being raised.

At immediate risk is the country’s balance of payments, which is quickly heading towards red ink. The government has also all but given up on the idea of having a balanced budget by 2010.Thus, be it macroeconomic or microeconomic, the rosy picture of the last few years is headed towards gloom.The worst possible scenario for many countries is that the high prices oil will result in runaway inflation, as the prices of all goods and services follow the trail of petroleum products. Today, it is the transport sector which is suffering. It goes without saying that all basic commodities need to be transported nationwide as part of the distribution chain. Sooner, rather than later, food prices will likewise shoot through the roof.

This week, a summit is being held by the United Nations in Rome to address the undeniable fact that where food security is concerned, the world had now reached an “alarming juncture.”There may be multiple and complex causes for the food crisis gripping many nations today, but we submit that high oil prices plays a major role. Without overstressing the point, it all boils down to the high prices of oil, which have more than doubled in a little more than a couple of years.

Once, only doomsayers were predicting that global prices of the precious commodity would head for the frightful $200/barrel barrier. Today, it is acknowledged that it is a matter of when, not if.Not too long ago, U.S. President George Bush had asked Saudi Arabia to increase its production of oil in the hope that such a move would arrest the rise in prices. Saudi Arabia – one of the biggest producers of oil – refused.This Middle Eastern country is not alone. From where we sit, the Organization of Petroleum Exporting Countries, or Opec, is ignoring the serious negative effect that their cartelized overpricing is doing to the rest of the world. Opec must be warned or reminded that their policy could have a boomerang effect on them. In using their commodity to strangle the developing countries of the world, they could be setting the stage for their own collapse.

There is a high price to pay for greed and for forcing weak nations to take desperate measures. Because they are perceived as bullies, the oil-producing nations of the world may get the punishment that all bullies deserve. When push comes to shove, they may not know what hit them.