Former Energy Secretary (and current Leyte governor) Jericho Petilla has the guts to express what no one else has the temerity to point out: prices, unfortunately, have nowhere to go but up.
Petilla recently raised eyebrows when he declared that oil prices going back to what I call the “pre-Iran war” prices of P61 per liter would be an impossibility.
Instead, he said, once things “normalize,” diesel prices could hit P100 or even higher, while gasoline may stay just below P100.
The reason: even if that orange idiot who put us all into this conflict no one wants and Iran decides on a truce (and as of this writing, both sides have reportedly agreed on a two-week ceasefire), damage to oil refineries and extraction facilities in the Middle East meant that it would take weeks, even months, for production to return to normal.
And that would even hinge on whether the United States and Iran can even agree on a permanent truce, as it's becoming obvious that the war is fast becoming unwinnable and unpopular (except for orange idiot's fire-breathing fanatical worshippers who seem to want to hasten Armaggedon).
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I’m no economist, but I’ve come to understand through a careful analysis of economic history that so-called “deflation” – or the decrease in the prices of basic goods and commodities – is generally rare, if not impossible in the modern world.
Deflation occurs when the inflation rate, or the rate of increase of prices of basic goods and commodities, reach zero or even negative.
That's a very unlikely prospect, and some even believe that deflation could lead in bigger problems – decreases in the price level leads to lower production, which in turn leads to lower wages and demand. In short, deflation can, ironically, hurt the economy in the long run.
In my view, what could happen instead is what economists call "disinflation:" prices of goods and commodities will still increase, but in a much slower pace.
We’ve already seen that in the months leading to the Iran War, when our country's inflation rate gradually stabilized to 1.7 percent - the slowest since 2016.
Let’s be realistic here: prices going back to the 2020 or even 2010 levels is purely wishful thinking, unless the government does something drastic like revaluing our currency (which needs careful planning and strategy to avoid an economic meltdown).
Instead, I believe, what our economic managers should do is to craft policies that ensure that our public will be able to catch up with our inflation rates.
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