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Tuesday, November 10, 2009

Artificial

I cannot understand why the government has still not lifted the EO order freezing prices of petroleum products. It is creating this whole energy crisis. As a response to facilitate recovery and help consumers from the series of typhoons, this should only be a stop-gap measure, a very short-term solution. Prolonging it any moment longer could have drastic consequences.

You cannot expect a business to operate knowingly at a loss. Why would oil companies import oil supplies when expected revenues are way below import costs.

Simple arithmetic really. The government is clearly buying pogi points for keeping prices artificially low, when in reality, as per world prices, it's clearly not. Once the EO is lifted, you can expect oil prices to jack up substantially since the oil companies would want to compensate for their loss when the EO was in place, on top of the high prices that they would be imposing. The government should have allowed the market to bear it in the first place so that the public could have adjusted to the prices gradually early on, rather than a sudden, steep adjustment that only breeds confusion and resentment.

With the campaign period kicking in, plus the onset of the holiday season, oil price increases will likely push inflation upwards, putting pressure on interest rates.

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