Wednesday, October 28, 2009

Keep It Simple

Another mild-mannered, moderate opinion piece--this one on the price of oil--courtesy of Alex Magno in The Philippine Star:

In our case, the peso has recovered significant value against the dollar. But that is not enough to cancel out the rising dollar price of oil we import from the world market. Inevitably, we will have to pay more for the oil we use.

In our case, however, there tends to be a lot of obscurantist noise that accompanies price rises for the commodity. It is obscurantist noise generated by ideological groups trying to score political points or, in the case of some AM radio commentators, plain stupidity.

Sounds like the NARN First Team has a fan in Manila.

Even as the economic facts underpinning oil pricing are pretty clear, the politically hysterical amongst us prefer to embroider it with a lot of politicized fiction.

For instance, the same leftist groups that called for the decommissioning of the San Roque dam (therefore forcing a shift to more diesel generation plants) also call for the return to regulation of the oil industry. It is as if oil deregulation caused world prices of crude to rise. That is absolute stupidity.

Absolute stupidity is a premium grade above plain stupidity.

There is another absolutely stupid idea that politicians pandering to populism have inserted into the debate lately. This is the idea that the timing of oil price adjustments be limited to monthly cycles rather than weekly, as is now the practice.

That will simply introduce rigidity into the equation. It will only encourage oil players to pad prices in anticipation of future rises in crude oil pricing and delay downward adjustments when this becomes possible in episodes of price declines.

Again, it is the ideological groups and militants in Congress proposing this idea. They should be put on trial for sacrificing the well-being of consumers by inflicting delusional solutions to rising oil prices.

They ought to have fist-fights on the floor of Congress! Actually, knowing the Philippines they probably do.

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