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Gia Recio, Contributor
 
March 15, 2011

Why the Price of Gas Is Rising: 5 Things You Should Know about the Libyan Crisis

FN gives you the talking points about the unrest in Middle East and North Africa and why it’s affecting local oil prices. By Gia Recio
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oil_crisis_inside1.jpgGassing up these days is definitely painful for the pocket. Current gas prices in the Metro Manila are at P54.50/liter for unleaded, P45.50/liter for diesel, and P53.50/liter of gasoline. While there have been no announcements of further increases, this is the ninth time this year that oil firms have hiked their prices—and it’s only March!

Wondering why the price of fuel is going up in leaps and bounds? This is related to the current crisis in the Middle East and North Africa, the world’s biggest oil-producing regions. The growing political unrest that continues to spread throughout the area has been the frequent subject of news headlines, television reports, and media coverage over the past few months.

Ever since the people of Tunisia toppled the regime of President El Abidine Ben Ali, other countries in the Middle East and North Africa have tried to follow suit, hoping to end the authoritarian rule of their respective leaders. The reports we see on television show people in arms, protesting governments that have long neglected their interests. We’ve seen footage and reports of riots, self-immolation, and bloody clashes with armed government forces.

While these conflicts directly affect the people of the countries like Libya, Algeria, and Yemen, they also play a key role in the global economy, particularly in relation to the price of oil since countries all over the world source their petroleum supply from the Middle East and North Africa.

FN gives you a backgrounder on the cause of these conflicts and their relation to the increase in gas prices in the Philippines. Here are 5 things you should know about the situation:


1. WHAT CAUSED THE CONFLICTS?

The current political climate in the Middle East was prompted by the recent overthrow of the Ben Ali government in Tunisia. In December 2010, a Tunisian man named Mohamed Buazizi set himself on fire to protest police corruption and the abuse he received from Tunisian government officials. This incident sparked a series of revolts from the people of Tunisia, and the unrest in the country eventually prompted President Ben Ali to flee and finally put an end to his 23 years in power.

The chain of unrest soon spread to other countries in the Middle East and North Africa. Citizens of countries such as Egypt, Yemen, Libya, and Algeria were inspired by the happenings in Tunisia and took to the streets, demanding reforms. These protests were punctuated by episodes of self-immolation, clashes between civilians and government forces, and attacks that led to casualties on both sides. However, the Egyptian riots grew to such proportions that in February 2011, Egyptian president Hosni Mubarak resigned—putting an end to his 30-year rule.

[Click here to read up on the Egyptian unrest]

At present, the unrest in Libya and Yemen continue to grow. There have been reports that Libyan protesters have been massacred by military troops under the control of its dictator, Col. Gaddafi. In Yemen, thousands of people have taken to the streets to call for the resignation of President Saleh. Major demonstrations also continue to take place in Iraq, Morocco, Bahrain, Oman, and Algeria.
  

2.  WHO ARE THE KEY FIGURES?

Col. Muammar Gaddafi has served as the leader of Libya since 1969, after he had led a successful bloodless coup d’état against King Idris I. Although Quaddafi does not hold any public office or title, he is usually accorded the honorific title of “Brotherly Leader and Guide of the Revolution” in government statements. His regime has been characterized by extensive censorship, political repression, and violence against both domestic and external opposition.

Ali Abdullah Saleh has been the President of the Republic of Yemen since 1978. Although he has been recognized as an ally of the United States in the campaign against the al-Qaeda, his 30-year term has been marked by corruption, human rights violations, and lack of democratic reform. In a recent BBC article, he described the protests in Yemen as “a copycat attempt, as Yemen is not Tunisia or Egypt, and the Yemeni people are different."


3.  WHY ARE THESE INCIDENTS AFFECTING GAS PRICES IN THE PHILIPPINES?

Since the Philippines imports most of its oil supply, our country suffers from the consequences caused by the rising prices of oil coming from the Middle East. This stems from the fact that oil production in Middle Eastern countries is primarily controlled by their governments rather than by private or independent companies. Hence, the production and exportation of oil from suppliers such as Libya, Algeria, Saudi Arabia, and Egypt has been reduced as a result of the political instability in these countries.

Given the spreading political unrest in the Middle East and its negative impact on the exportation of oil, price hikes continue to plague the global oil market. Here in the Philippines, diesel prices have gone up by P4.50 per liter, while gasoline prices have risen by P4.25 since January, with only one rollback for each since. Moreover, according to an article from The Philippine Star, local oil firms such as Chevron Philippines, Pilipinas Shell Petroleum, and Eastern Petroleum have implemented cost hikes to match the increase in international prices. 


4.  WHAT IS BEING DONE ABOUT IT?

The Philippine government has been closely monitoring the price hikes in oil alongside the political tension in the Middle East and Northern Africa. However, according to Department of Energy (DoE) Secretary Jose Rene Almendras, the government is not considering taking any measures to cap or regulate the price of oil in the country. Almendras stated that in order for the government to control the price of fuel, it would have to establish an oil price stabilization fund (OPSF). This would require US$2 billion as capital and would therefore cause a heavy financial strain on the Philippine government’s coffers.

In a recent interview on TV Patrol, Almendras mentioned that, as a precautionary measure, the government will try to increase the country’s inventory of crude oil and other oil products. This is to ensure that the Philippines will still have an adequate “buffer stock” of petroleum products that may last for a month or two even if no deliveries are made to the country in the event of a supply disruption caused by the tension in the Middle East and North Africa.


5. WHERE CAN WE GET UPDATES?

For daily updates on the conflicts in the Middle East, you may refer to websites such as BBC News and CNN.com. These two news sources also offer weekly timelines of the unrest in the Middle East and Northern Africa as well as more specific, extensive discussions on the most recent occurrences in the affected countries.

You may also refer to the articles on the Philippine Daily Inquirer website, The Philippine Star Online, and ABS-CBNNews.com, especially for updates regarding the impact of these conflicts on gas prices in the country.


(Photo source: Wikimedia Commons)
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  • luisacart Mar 15 2011 @ 08:23pm Report Abuse
       
    His name is Mohamed Bouazizi.
    Last modified A long time ago
  • PeterP Aug 09 2011 @ 11:06am Report Abuse
       
    This shouldn't be acceptable. US Oil is at $80 a barrel. Why are we still at $120 a barrel pump prices?
    Last modified A long time ago
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