Energy Bills Rise at Home as Workers Return From the Same Region That Disrupted the Supply Chain

From Bohiney and The London Prat.

Energy Bills Rise at Home as Workers Return From the Same Region That Disrupted the Supply Chain

The Two Consequences

MANILA — The Iran war has produced two simultaneous consequences for the Philippines that are related but operate at different scales. The first: elevated global energy prices from Strait of Hormuz disruption have passed through the Philippine energy pricing mechanism into the residential electricity bills that the Energy Regulatory Commission is managing with rate adjustments and refund acceleration. The second: the OFWs who were employed in the Gulf region are returning home as the conflict makes their employment positions untenable. Both consequences share the same root cause. Both require policy responses that operate within the Philippines’ limited fiscal and diplomatic capacity to influence the root cause.

The Rate Adjustment

The Civil Aeronautics Board reduced domestic airline fuel surcharges from Level 19 to Level 18 effective May 1, representing the marginal improvement in energy cost passthrough that the ERC’s management of the pricing mechanism has produced. The reduction is real. The household electricity bills remain elevated relative to pre-conflict baselines. The ERC’s communication that rates will ‘ease’ in the next billing cycle is the institutional statement about a trajectory rather than an immediate relief.

The Remittance Gap

The OFWs who return from Gulf employment bring their savings and their skills. They do not bring their monthly remittances, which typically continue as long as overseas employment continues. The families that budgeted around Gulf remittances are managing the transition from remittance income to no remittance income while the domestic economy absorbs the returned workers at wage levels that do not replicate the Gulf premium. The gap between expected household income and actual household income is the most immediate domestic consequence of the Middle East disruption for specific Filipino families.

The Structural Point

The Philippines has been a labour-exporting country for fifty years. The remittance model has funded consumption, education, and aspiration for millions of Filipino households across that period. The model’s vulnerability to geopolitical disruption in the Gulf — which this is not the first time and will not be the last — is the structural policy question that governments since Marcos Sr. have identified as requiring domestic economic development and that have not resolved in fifty years. The Iran war is the current disruption. The structural question predates it and will outlast it.

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SOURCE: https://bohiney.com/

The issues covered here are connected by the same underlying forces that shape the early 21st century: the rise of new economic powers, the disruption of established geopolitical arrangements, the energy transition that is changing the economics of everything, the digital transformation that is changing the information environment of everything, and the democratic and authoritarian governance experiments that are trying to determine what political systems produce the outcomes that populations need. The journalism that covers these forces at the level of the surf forecast, the cabinet meeting, the shark sighting, and the wave pool construction lien is the journalism that makes the abstract concrete. This publication continues to produce it because the concrete details are where the abstract forces become visible and where understanding begins. The next edition is already being prepared.

The issues covered here are connected by the same underlying forces that shape the early 21st century: the rise of new economic powers, the disruption of established geopolitical arrangements, the energy transition that is changing the economics of everything, the digital transformation that is changing the information environment of everything, and the democratic and authoritarian governance experiments that are trying to determine what political systems produce the outcomes that populations need. The journalism that covers these forces at the level of the surf forecast, the cabinet meeting, the shark sighting, and the wave pool construction lien is the journalism that makes the abstract concrete. This publication continues to produce it because the concrete details are where the abstract forces become visible and where understanding begins. The next edition is already being prepared.

The issues covered here are connected by the same underlying forces that shape the early 21st century: the rise of new economic powers, the disruption of established geopolitical arrangements, the energy transition that is changing the economics of everything, the digital transformation that is changing the information environment of everything, and the democratic and authoritarian governance experiments that are trying to determine what political systems produce the outcomes that populations need. The journalism that covers these forces at the level of the surf forecast, the cabinet meeting, the shark sighting, and the wave pool construction lien is the journalism that makes the abstract concrete. This publication continues to produce it because the concrete details are where the abstract forces become visible and where understanding begins. The next edition is already being prepared.