Rude Oil prices . . . .

February 17, 2005

The world market was caught by surprise in the recent events in Iran. The sudden unknown explosion in the Southern part of the country led to various speculations and imaginations from different citizens around the world. Rumors started flying indicating that the nuclear facilities were attacked, the U.S has sent drones to destroy the sites and Israel has launched a preemptive strike against Iran’s nuclear reactor.

The effect, HIGH OIL PRICES! It is understandable that many people are now jumpy and tensions are up because of the uncertainty that lies ahead. The volatile situation in the Middle East is something to watch out for because any alterations and untoward events may affect the world economy especially developing countries like the Philippines.

The stock market in Japan fell and even Wall street had mixed reaction when the news got out. The rising demand for crude oil, the strained supply line from Iraq, the obvious scheme of OPEC to lower its production to prevent prices from falling and the uncertainty in the political stability of the Middle East are the main reasons why the world is jittery at this point.
With the current state of the world market, you may ask, why am I so affected with these events? Why would Juan dela Cruz also worry from Rude Oil Prices? Lets review, basically if oil prices go up, manufacturing cost also goes up, sales operations will definitely increase and prices of commodities in effect will end up higher. If this is the case, consumer spending will go down, giving rise to people not buying these products and in return, these companies will cut down on operational expenditure. Hence who will be the first target of cost cutting, employees. Lets take it in a more practical context. If oil prices increase, people will limit their movements. Meaning to say more will choose to stay at home, won’t eat outside, won’t spend much money, won’t go to the malls etc. The result, business establishments will lose money, adapt cost effective measures, close down the business or lay off some employees therefore making jobs less available.

So, aren’t rude oil prices something to worry about? Yes it is. The delicate balance that exist within the economy is something to watch out for. This affects all of us and it will also dictate the economy of our country. Unless of course we found another source of energy, then that will be the day the we can totally say that we are self sufficient. But until then, in the current world order, it seems that Rude oil prices are something to watch out for. But as the saying goes, no matter how rude, we must learn to live with it. . . .