EDITORIAL – Benefits

LAST Saturday, some taxicab drivers in Davao City started collecting flag-down rate of P30, P10 lower than the usual. The decrease is implemented nationwide by the Land Transportation Franchising and Regulatory Board (LTFRB) due to the falling of prices of fossil oil in the market for quite sometime now. This phenomenon will benefit not only Dabawenyos but other Filipinos as well.
Ivan C. Cortez, who heads the Davao City Investment Promotion Center, explained that Dubai crude price used to hover from 90 to as high as 110 dollars a barrel last year but in the last six months, the average has been between 45 to 55 dollars a barrel.
“While those in the gas and energy sectors will incur losses as they have to polish their balancing act insofar as disposing high-priced inventories, overall, Davao consumers will gain from the effects of lower oil prices,” the DCIPC chief said.
Cortez said that even coal players will have to adjust and lower their prices in order to maintain their edge over diesel in the energy sector.
“Our oil-dependent economy will gain because lower oil prices will mean lower inflation,” he said.
In layman’s term, lower inflation will mean cheaper basic commodities, and Cortez said “your usual grocery items like canned goods should have lower prices by now.”
Cortez said the savings from transportation and electricity can also translate to higher savings and higher consumption. “Lower inflation could result to monetary policies that will encourage more players to engage in business, ” he said.
“We expect interest rates to slide down from 4%. This would mean more money circulating rather than being kept at banks’ vaults,” Cortez said.
The economists at Oxford have singled out the Philippines as the biggest gainer in the world if oil prices remain at their current levels (40-50 dollars a barrel) for the next 8 months and should also translate to an additional 2% growth in the country’s gross domestic product (GDP).
Just how long will this situation last, nobody can tell for sure. Filipinos can only hope, obviously because there is no way we can influence the perpetuation of such a phenomenon.