Republic of the Philippines

Region VIII
Catbalogan City, Samar
Samar Colleges

“Globalization acts to decrease world oil prices that

would lower the prices of domestic products in the
Philippines”.

Submitted by:
Mate, Mar Huey E.

Submitted to:
Irene C. Evangelista
I. Introduction

There is an emerging sense of “the world becoming a single place”

and this is due to the phenomenon of globalization. Globalization is a
process through which the world becomes increasingly
interconnected whether economically, politically, geographically or
culturally. It involves the flow of ideas, information, goods and services
transnationally, and this is usually powered by the movement of
people. Particularly, it leads to the effect of brain drain on the home
country, which is defined as the movement of people who are
proficient in their areas of expertise with the aim to pursue more
favourable job opportunities This poses the problem of the loss of
human capital, skills and knowledge, and this will most likely hamper
economic growth and development of the nation. Cheaper oil will
affect PH economy, with the sudden shift and movement of oil prices
in the market, energy-exporting countries would predictably suffer from
revenue decline, while nations that mostly import oil and even
subsidize the fuel prices would most probably be on the positive end,
especially in terms of trade balances.
II. Body

Having cheaper oil supply has been outstripping demand as of late.

And with that, prices of oil have suffered a big decline in the global
market. As oil consumption in Philippines and other countries soared
over the past few years and conflicts rose in oil-producing nations like
Iraq, oil prices consequentially skyrocketed. And even with the
declining demand, some oil-producing and -exporting countries have
refused to cut back on their output. Instead of bringing back the high
prices of oil, they'd rather not lose their market share by diminishing
their target for production. Cheaper oil will affect PH economy, with
the sudden shift and movement of oil prices in the market, energy-
exporting countries would predictably suffer from revenue decline,
while nations that mostly import oil and even subsidize the fuel prices
would most probably be on the positive end, especially in terms of
trade balances. There are clearly winners and losers here, and the
Philippines has much more to gain in this scenario. Lower prices of
goods/commodities, cheaper oil would translate to lower
transportation cost. This will make delivery of goods and services much
more economical for many businesses and the private and public
sector in general. By reducing cost of production and expenditure on
logistics, this will subsequently lower the prices of basic commodities.
Increased consumption, the lower prices of basic goods would help
increase consumption. With more disposable income, consumers will
have increased purchasing power, especially for the middle class. With
cheaper fuel and lower-priced petroleum products, people are able
to spend more on other commodities and goods. They can even make
bigger savings, which they can pour into other investments such as real
property. Increased consumption can raise the revenues of many
businesses. Much of the income from increased private consumption
would most likely be poured into the retail sector. More dollar reserves,
with cheaper oil, the country will be able to save more of its dollars
since the foreign currency is used by oil companies for importing and
purchasing oil. The dollar reserves can be put to better use, such as for
paying debts and funding projects. This can also help boost the value
of the local peso, pushing further for its steadfast recovery in the
current state of economy. Although the country obviously has much to
gain from the cheaper oil prices, this can also have some backlash on
the economy. Decelerating oil prices would affect the production and
distribution of oil in the global market. And for Filipino overseas workers
in oil-producing countries, this could mean extensive job cuts. The loss
of income earned abroad will affect thousands of families. This will also
decelerate the flow of remittances that also help stabilize the
economy. Many leaders deem country-to-country oil agreement
impossible to implement as the giant oil companies have still strong
influence on the policy-making process in the country. On the part of
the oil companies, it will be a huge loss if government will assert its
power to have a bilateral agreement with any of the oil-producing
country. Also, many leaders consider the Philippines as a small nation
with no voice in the international assembly. But it is a matter of having
“big balls,” to put it in a figurative language. After all, they are the
leaders and are mandated by the Constitution to protect and
promote the general welfare. Another perculiarity of the Philippine
policy system is the negative perception towards nuclear energy. BNPP
has been stigmatized as being environmentally dangerous and as
being associated with “corruption.” The fact of the matter is, the
technology has already evolved and been modernized. The Philippine
government spent $2.3 billion to build BNPP without generating a
kilowatt of electricity. It is high time to revisit the old strategy to finally
free the country from dependence on imported oil. Leadership, we
need politicians who are willing to confront the cheaters. One of our
biggest problems is that 7 of our trading partners manipulate their
currencies to gain unfair price advantage which increases their exports
and decreases their imports. This is illegal under WTO rules so there is a
sound legal basis to put some kind of tax on their exports until they quit
cheating.
III. Conclusion

Therefore, competition between countries is supposed to drive prices

down. In many cases this is not working because countries manipulate
their currency to get a price advantage. It also provides poor
countries, through infusions of foreign capital and technology, with the
chance to develop economically and by spreading prosperity, creates
the conditions in which democracy and respect for human rights may
flourish. This is an ethereal goal which hasn’t been achieved in most
countries. According to supporters globalization and democracy
should go hand in hand. It should be pure business with no colonialist
designs. There is now a worldwide market for companies and
consumers who have access to products of different countries.
Gradually there is a world power that is being created instead of
compartmentalized power sectors. Politics is merging and decisions
that are being taken are actually beneficial for people all over the
world. This is simply a romanticized view of what is actually happening.
There is more influx of information between two countries, which do not
have anything in common between. There is cultural intermingling and
each country is learning more about other cultures. Since we share
financial interests, corporations and governments are trying to sort out
ecological problems for each other. Socially we have become more
open and tolerant towards each other and people who live in the
other part of the world are not considered aliens. Most people see
speedy travel, mass communications and quick dissemination of
information through the Internet as benefits of globalization. It is high
time to revisit the old strategy to finally free the country from
dependence on imported oil.