Peak Oil Never Died: Energy, Illusion, and the Philippine Reckoning
By Karl Garcia
In the early 2000s, a theory began circulating among environmentalists, energy experts, and geopolitical analysts: peak oil. The idea was simple, even brutal. Global oil production would eventually reach a maximum—then decline forever. Like a candle burning down, the world would slowly lose the energy that fuels modern life.
Many dismissed it as alarmism. Others mocked it as a failed prediction. Yet the truth is more unsettling and more relevant today:
Peak oil was never just about running out of oil.
It was about running out of cheap oil.
That distinction matters—especially for countries like the Philippines, which never had the luxury of energy independence. We inherited an economy built on imported fuel, foreign-controlled refining, and a political culture that treats cheap gasoline as a permanent entitlement. That system is now being exposed as a fragile fantasy.
The Origin of Peak Oil
The concept of peak oil originated in the United States in the 1950s, when geologist M. King Hubbert observed that oil production in any region follows a bell-shaped curve. He predicted that US oil output would peak in the early 1970s—an idea widely dismissed at the time.
Hubbert was proven right.
US production peaked around 1970 and declined for decades thereafter. The lesson was clear: oil is finite, and the easiest reserves are always extracted first. As time passes, extraction becomes more difficult, more capital-intensive, and more expensive. Hubbert later extended this logic globally, warning that the world would eventually exhaust its supply of cheap oil.
Peak oil was never a doomsday clock.
It was a cost curve warning.
What Peak Oil Really Meant
Public discourse misunderstood peak oil almost immediately.
People thought it meant:
“The world is about to run out of oil.”
What it actually meant was:
“The world will run out of oil cheap enough to sustain its current way of life.”
Modern economies are not built on oil per se.
They are built on abundant, cheap, and reliable energy.
Cheap oil made everything possible:
- Globalized supply chains
- Mass motorization
- Industrial agriculture
- Cheap food and transport
- Military projection and national security
Once cheap oil disappears, everything becomes more expensive—food, transportation, manufacturing, housing, and even governance. Inflation becomes structural. Inequality widens. Political stability erodes.
Peak oil was never about apocalypse.
It was about fragility.
Did Renewables Make Peak Oil Obsolete?
At first glance, it may seem so.
Since the 2010s, global oil production has not collapsed. US shale, deepwater drilling, and unconventional sources delayed decline. At the same time, renewable energy, efficiency gains, and electric vehicles began to flatten oil demand in wealthy countries.
This led to a new narrative: “peak demand” instead of peak supply.
But this does not invalidate peak oil theory. It updates it.
Today’s reality is this:
- Oil still exists in abundance
- But it is harder, riskier, and costlier to extract
- Prices are increasingly volatile
- Production depends on geopolitics, debt, and speculation
The world has not escaped peak oil.
It has entered the era of permanent energy insecurity.
For oil importers, this is worse than scarcity.
What Peak Oil Means for the Philippines
For the Philippines, peak oil is not an abstract theory. It is lived experience.
1. A Nation of Energy Importers
The Philippines imports nearly all of its oil. Every spike in global crude prices hits Filipino households immediately—through fuel, electricity, food, and transport costs. Wars in the Middle East, tensions in the South China Sea, or disruptions in shipping lanes translate directly into domestic hardship.
This is not just an economic issue.
It is a sovereignty issue.
A country that cannot control its energy supply cannot fully control its future.
2. A Transport System Locked into Fossil Fuel
Jeepneys, tricycles, buses, trucks, ferries—our transport system is almost entirely oil-dependent. When fuel prices rise, the poor suffer first. The middle class is squeezed next. Productivity falls. Inflation rises.
Peak oil, for the Philippines, is not about depletion.
It is about exposure.
3. Paying Twice for Cheap Oil
Cheap oil was never truly cheap.
It was paid for through:
- Climate change
- Disaster recovery costs
- Ecosystem degradation
- Public health impacts
The Philippines is among the most climate-vulnerable countries in the world. We pay once at the pump—and again when typhoons destroy homes, crops, and infrastructure.
Why Renewables Still Feel Expensive
It is tempting to say that renewables are the solution. But in the Philippines, they are not cheap—at least not yet. And pretending otherwise undermines credibility.
1. Up-Front Capital Costs Are High
Solar panels, wind turbines, batteries, and grid upgrades require massive initial investment. Unlike fossil fuels, which are consumed monthly, renewables demand payment before benefits appear. In a country with high interest rates and limited green financing, this makes RE feel unaffordable.
2. Fossil Fuels Hide Their True Costs
Oil seems cheap because we ignore its hidden prices:
- Climate damages
- Disaster reconstruction
- Health impacts
- Geopolitical risks
If oil reflected its full cost, renewables would already appear cheaper.
3. Our Systems Are Built for Oil
Electric grids, transport networks, and industry are designed for fossil fuel use. Integrating RE requires major redesigns. Transitioning without systemic change increases upfront cost perception.
The Philippine Trap: Oil Is Expensive Too
Here’s the paradox: oil is no longer cheap either. Volatility, geopolitical risk, taxes, and regulation make fuel unpredictable and risky. The Philippines is paying for both—high RE costs and expensive fossil fuel consumption.
The real comparison is not “RE vs oil.”
It is:
High up-front certainty vs low up-front illusion.
Renewables may feel expensive, but oil is more costly in the long term—economically, socially, and environmentally.
Peak Oil as a Wake-Up Call
Peak oil is not merely an energy problem.
It is a crisis of imagination.
Filipinos are known for bayanihan—our ability to rally together in times of disaster. Peak oil demands the same spirit, but applied strategically and deliberately.
This is not about sacrifice for its own sake.
It is about reclaiming agency.
Toward Energy Sovereignty
1. Renewable Energy as National Strategy
Solar, wind, geothermal, and hydropower are strategic assets. Every megawatt built locally reduces import dependence, stabilizes prices, and strengthens resilience.
2. Decentralized and Community-Based Energy
Centralized grids are vulnerable—to storms, sabotage, and system failure. Microgrids, rooftop solar, and local storage create energy sovereignty at human scale.
3. A Transport Revolution
The future is electric—and public. Electric jeepneys, buses, rail, and bike infrastructure are not luxuries—they are survival mechanisms in a post–cheap-oil world.
4. Industrial Policy Beyond Oil
The Philippines must stop building an economy dependent on imported fuel. Local manufacturing, green technology, energy storage, and grid intelligence are survival strategies—not optional projects.
Peak Oil Was a Warning
Peak oil was not a lie.
It was not hysteria.
It was not disproven.
It was a warning—and we ignored it.
Now the cost of that neglect is being paid daily by ordinary Filipinos. Yet the future is not fixed. Peak oil does not dictate collapse. It demands choice.
The question is not whether oil will run out.
It is whether the Philippines will finally run toward its own future—even if the road is initially costly, challenging, and unfamiliar.
Renewables are not cheap yet—but oil is far costlier. The choice is between expensive inaction and strategic investment.
Peak oil has arrived in the form of high prices, vulnerability, and climate shocks. The Philippines can either continue paying the price—or start building resilience, sovereignty, and imagination today.
The Society of Honor by Joe America 
I think the main argument for going electric through renewable sources (like solar and wind) is not cost savings, but preservation of the planet.
Asking a country that has already tightened its belt to tighten it further and invest in renewable sources of energy is a tall order.
I see your good point
10 years ago I worried that the Philippine economy would collapse when Malampaya oil fields dried up in 2024. They discovered new gas fields nearby this year. And the nation has been pressing forward with renewables and possibly nuclear. As I wrote long ago, Biliran Island could easily supply itself and Leyte with power. Thermal, hydro, solar, tidal. The only things holding it back are laziness and corruption. I have solar on the agenda for our place next year, the cost worth the security. I’m going off grid within the grid, lol.
Go ahead offing the grid hehe
🤣😂🤣🏆
I am now on solar for 30 years and will add a wind generator next month.
My lesson was that offgrid can be expensive. You need to ruthlessly minimize your power consumption and then balance your use with the availability. (e.g. do not use a washing machine when there is no sun, switch on the ice maker when there is sun or learn to wash with cold water).
It is fun, it can be done.
It is great, I did it, but it needed a huge learning curve.
If we want everybody to do that, it will require a load of support from the government. Not giving away installations, but solid advice.
And I do not see a lot of expertise around here. Not in design, equipment selection, installation, maintenance nor in operation.
Be very aware of the limitations before you embark on an off-grid installation.
It used to be that a solar install needed specialized equipment:
1.) Solar panels
2.) Charge inverter
3.) Electrical subpanel for grid hookup
About a decade plus back I got into salvaged automotive lithium ion battery pack backups which additionally need:
1.) Lithium ion batteries
2.) Battery charge harness
3.) Hybrid charge inverter
4.) Charge controller
This was before Tesla Powerwall and similar solutions. Prior to lithium polymer batteries battery packs in question just used standard laptop batteries (18650) inside, later 21700 batteries. I had to create my own charge controller first out of an old PC, later a corporate mini PC. I also had to cobble together and build my own code from open source. Today such controllers can run on a cheap Raspberry Pi single-board computer about the size of a credit card.
A few months back I got my dad’s house installed with consumer battery-backed solar. The system is prepped for vehicle-to-home (V2H) but my dad isn’t ready to let go of his gas guzzling Benz yet. Much easier nowadays as everything above except for the solar panel and sub panel has been miniaturized into one unit. The Chinese are dumping out massive amounts of smaller solar battery backup systems that are enough to power a refrigerator, induction stove, lights and small appliances throughout the night. My dad happens to be both an electrical engineer and mechanical engineer, but from the instructions everything was easy enough with clear electrical diagrams. We just hired a few day laborers to handle the heavy lifting while we did the install ourselves.
OT: Gerry C: https://www.facebook.com/gerrycacanindin/posts/pfbid02quuV7hCy4BFFdVZQcNaARvqkKwnLGh1fEsvrigAoePYn3D9nVUDf6jEYzpNUTLXQl
I have worked all my life in the oil business, our community was well aware of the Peak Oil principle. The document floated around during my training in 1978. It was fascinating rreading because it was written by a researcher who proved his point scientifically.
Even if the “total volume estimate” was way off, the bell shaped curve stands like a rock and the prediction was solid.
The only “mistake” was that it was sold as “we run out of oil” which was then disputed as nonsense by the PR people, so we could continue oil production with a clear conscience.
And why was it ignored by us all?
Because we all knew that even though it was probably true, alternatives would become available and it was just an economic balance between the price of oil and its alternatives.
And also this prediction is becoming reality.
Kind of….. BUT, the problem is that the price of oil is kept artificially low.
We indeed do not pay for the social and environmental consequences. The balance and economic reality therefore is skewered. Hiding the true cost of the use of hydrocarbon has been a major activity of the PR departments of the big oil companies and (paid) politicians.
And there, this goes wrong in Philippines.
Let face it, Philippines is a very capitalistic country, everything is governed my money, little is achieved by appealing to conscience or responsibility.
Therefore, the logical conclusion is that we should include the social and environmental cost in the price of oil. Make it an econoomic solution for a practical problem.
And then the price at the pump becomes the same as in Europe. Automatically, the smoke belchers will be forced to switch to electrical cars or more fuel efficient cars. All those gas guzzling 4-Wdś driving around in the city will change to (electric?) small family cars.
If the price for coal would include those social/environmental costs, electrical energy prices double, people will switch to solar automatically. From 30 years experience, I can say that this would be a huge motivator to reduce energy consumption and balance availability & use.
We certainly would get sad stories about “poor people paying the price”, but that is a red herring. At the moment, the poor people ARE paying the price for pollution, for poor and inefficient transport, for the environmental disasters. Maybe have a look to Australia where the excessive heat is causing a devastation on a huge scale.
When we get fair prices for energy, we should not waste the extra income/tax on giving installations to “the poor”. We have made that mistake over the past 20 years.
We should invest.
Invest in certification of high quality installations, in training and certifying high quality engineers. In providing affordable loans to households for installing certified installations.
Basically changing the current situation where amateurs install Mickey Mouse installations designed by profiteers and maintained by tinkerers.
We have to future-proof our provision of energy.
We missed the chance when the jeepneys were replaced with similar technology, when CARP killed agriculture, when we implemented K-12.
Let’s not make that mistake again. We are now talking about survival..
Because:
But the problem goes much further than Peak Oil.
A similar story can be told about:
– (drinking) water
– Land
– Food (rice, veggies…)
– Medical
It essentially is all about (not) willing to see the limits of our actions and (not) willing to consider alternative (better) ways to live our lives.
Trump and Carney just came to a head about water and it is becoming clear that there is a huge problem in the USA, but it has been simmering for 50 years. Does this maybe ring a bell???
Just like the report of the Club of Rome which has been ignored for 50 years and it STILL is, in spite of the International Panel for Climate Change reports, the warnings are still taken with a pinch (handfull?) of salt by our glorious leaders.
The issue is much, much bigger than Peak Oil and it will be interesting if humanity is willing and able to change from a hunter/gatherer mentality to the mentality presented in the speech of the Indian chief Seattle https://en.wikisource.org/wiki/Chief_Seattle%27s_Speech where we change to custodians of the earth, our one and only planet we live on, where we have no “Plan-B”, whatever Musk pretends.
And here in Philippines, we are heavily exposed to the consequences of what is going on in the world but we are still not motivated to play an active role apart from playing the victim.
But also here, the solution will present itself irreversibly if we do not assume an active role. The adjustments will follow the capitalist principles present so prominently in our society: resources will become very expensive very soon and the in-equality will rise. Maybe until the breaking point will cause a collapse.
My dad taught me a lesson when he took my baby hand and held it to the hot coal stove: after that, I stayed far away from the stove and when it was red hot in winter it prevented me getting hurt seriously. The lesson was: if you do not learn, you will face the consequences.
Translation: better double the price for energy and prepare the country for times when energy, water, land, food, clean air and medical support will be scarce and expensive.
In the Filipino environment, will this be a realistic solution?
In an environment where the big families are involved in selling as much electricity as possible to maximize profits, where cheap diesel buys votes, where mediocre education buys tickets to jobs, where cheap Chinese goods are preferred above high quality equipment, where selling medicines is a better business than preventing diseases???
Unlikely.
BUT, the consequences will follow automatically. The laws of physics and economics are not negotiable.
The choice is ours….
…..just do not come back in 5 years time with tears in the eyes when the predictions came true when nothing happened to stop the train running on the tracks…… (hence, I have no pity on the USA running out of water, Australia getting red-hot, the Europeans drowing in flooding rives or South Africa running dry, the tourists avoiding steamy Spain or another crop failing because of the weather……..).
Good to see you Paul. I hope you and your family are doing well.
I too have the opinion that the Peak Oil Theory was always sound, as similar theories on reserves-to-production ratios (production curves) only account for *what is known at the time.* Of course one cannot account for future advancements in extraction technology nor yet to be discovered resources, as these are unknowns. The Peak Oil Theory was also a study of Saudi Arabian oil fields exclusively, yet was improperly applied as arguments both for and against increased oil production in places outside of Saudi Arabia.
In any case, you’re correct that the basic calculation is an economic one. There is a preference for petroleum-based energy in much of the world because petroleum-derived energy is subsidized in much of the world. But this energy subsidization mostly only makes sense for states that have access to the base energy resource in the first place, or at least the ability of extensive refining operations — which the Philippines does not.
China is barreling ahead with alternative fuels precisely because China lacks petroleum reserves, while also menacing smaller neighbors in the WPS/SCS as a hedge in the case China is able to wrest control of petroleum resources there. France is also an example of a state which has minimal fossil fuel reserves, which caused France to invest heavily in nuclear energy early at the dawn of the Atomic Age.
A mix of solar, wind, geothermal and energy storage makes sense for the Philippines, but my worry here is the aforementioned are more complicated than just pumping petrol or diesel. And the Philippines tends to not do well with complicated things.
Complication requires careful planning, preparation, but most of all complicated things require the ability to adjust course when new factors arise. For example, it is easy enough to hire outside experts to design and build something, let’s say a bridge. Certainly there is some Philippine capacity to maintain what exists, but without the capacity to build, inevitably one is simply maintaining the slower degradation of the thing to be maintained.
Just in broad strokes to transition off of petroleum the Philippines would need to figure out how to weave together a multitude of large utility, commercial and residential installations into a cohesive energy grid. Charging points need to be installed. A robust long-distance transmission network would be needed to shift power between regional grids based on consumption demand. The underlying technology to tie together disparate energy sources has long been available, and storage technology is increasingly “affordable.” But all these require a systems understanding. An ability to have a bird’s eye view of the overall system and how all the pieces fit together. In the end, it’s just simpler to go to a filling station and pump the petrol or diesel.
Interestingly very poor Filipinos seem to be (at least to my observation) on the forefront of innovative behavior. Those who could not “afford” utility-provided electricity (or just don’t want to pay lol) have switched to solar-battery fans, lighting. Those with a bit more money have small battery-backed systems connected to foldable solar panels that can be stowed away at night time or during a typhoon. These poor Filipinos might not have the education or the training but they are able to construct piecemeal solutions where it makes sense, and figure out how to tie separate components together. Now if only those in Philippine government can think along the same lines, instead of chasing built-to-order systems where the Philippines becomes a buyer and end-user rather than learning how to “DIY.”
Nice to see you again Pablo. Thanks for the industry insights.
important OT: https://x.com/pos2only/status/2024348270924120481 “The Philippines’ biggest industry has about 3 years left” by someone who seems to know what he is talking about:
P.S. my own comment to this is that probably indeed a lot of 1st level support can be replaced, one level above FAQ so to speak, and of course AI in support means you have a curated dataset, so even second-level support can be speeded up as the staff can get hints from the LLM (I guess, I am a newbie when it comes to understanding AI) – now I don’t know where PH is on the support food chain but I guess mostly 1st-level which must be similar to what he calls “Tier 1”.
P.P.S. the Philippines never was that good at levelling up. India has a software industry and is a player even if not yet at the level of Western companies. Romania, also a BPO hub, utilizes its being in the EU for being a player in the software projects industry there – their people can come to kick-offs and cutovers face to face while working on the rest back home, but that is of course complicated, needs a strong sense of what the customer needs and wants plus feasibility.
(Indians and Romanians have far from neutral English accents, even as the modern world of social media means that the younger ones seem more “international” as in locked into the typical lingo everybody uses nowadays, while the Philippines seems to have rested on its laurels of English proficiency, even as some commenters here have mentioned that comprehension isn’t always what it should be so I guess not much 2nd level possible?)
Have one like this topic for March 25 might move it earlier
Artificial intelligence is rapidly reshaping the survival calculus of institutions, businesses, and societies, acting less like a mere technological upgrade and more like a selective evolutionary force. In this environment, success no longer belongs to the largest or most established actors, but to those capable of strategic agility, digital fluency, and deep community integration. Universities must evolve from static knowledge transmitters into adaptive ecosystems that teach critical AI literacy and produce applied, socially embedded research. Firms must move beyond automation alone, pairing AI efficiency with human-centered trust, storytelling, and hyper-local engagement. Military and security organizations must embrace decentralization, decision speed, and AI-enhanced intelligence to remain resilient against rapidly changing threats. For the Philippines, where structural vulnerabilities intersect with immense human creativity, the imperative is especially clear: survival in the AI era depends on adaptability, experimentation, and the preservation of human connection. Those who integrate AI as an amplifier of judgment, culture, and community will thrive; those who resist transformation risk obsolescence.
@Karl
Somewhat off-topic, but I am curious what AI tools are you using, particularly in helping formulate these articles.
As for me, I personally still write all my comments with my monkey mind but lately I’ve been enamored by reading analysis using Claude’s research mode* to generate overviews of markets/trends I find interesting or which I encountered and got curious about while reading an article online.
Before I tried claude and gemini but lately I stick to chat Gpt tganks for asking. To avoid hallucinations I ask for a fact check but only when I doubt, so some inaccuracies still slips when I am too trusting.
I am reminded of a term I learned here from the late Edgar Lores:
https://en.wikipedia.org/wiki/Epistemology as in how we attain knowledge. It is a bit like court cases, as MRP used to say there is forensic evidence versus affidavits and witness accounts. I still feel safer with Wikipedia as one can double-check the citations like one can check footnotes in serious books and academic work – even as ChatGPT now often provides source links, some are dubious. I am reminded of how inaccurate Yahoo was, and one fine day in the late 1990s or early noughties my brother told me about GOOGLE and there was a world of difference. Took me three months (evenings) to write “Half a Millenium After Magellan” as I wanted to be very accurate but fortunately many academic papers are now available online, that would have been a year in libraries decades ago. The example of what ChatGPT told me about BPO and what Joey quickly corrected confirms BTW my doubts about how useful AI ALONE is at this point in time.
https://x.com/heygurisingh/status/2025237896647901361 about AI, and I agree, it is just a way of getting summaries of what is already online..
The way I view consumer “AI” (i.e. chatbots) is that they are first and foremost predictive word generators, and secondly are modeled to convey those generated words with targeted synthetic empathy. For humans empathy is powerful. Empathy is the greatest tool of persuasion. If one takes a step back, it is quickly evident that AI chatbots *always* generate responses in a seemingly emphatic and positively acknowledging manner. Even when the chatbot “disagrees,” the response is conveyed in a positive way.
Whenever I think about a chatbot, I think about the time in college when I tried my hand in tutoring students as a sideline. I had a few excellent students, and I had some frankly terrible students who were coddled and spoiled by their parents. I remember a child who was G3 age but was held back into G1. He constantly tried to take shortcuts rather than doing the hard work. When we would go through the ABCs together, he’d guess based on pictures then look at my facial expressions to try to figure out if I approved or not. When I mixed up the ABCs and the pictures, he could not get anything right. But that kid was a great gaslighter and succeeded in tricking every tutor who came before me.
What AI chatbots *cannot* do is to create what is unknown. Chatbots depend on a LM that in a way is pre-sorted, pre-conceptualized even (this is what “training a language model” means). So professionals that are inherently creative are at much less risk than those professions that primarily organize information. Unfortunately much of what we think of as “white collar work” is in organizing information.
I asked ChatGPT for both a SWOT analysis of the Philippines as well as an analysis of the AI threat to BPO including measures against it and got this:
next I asked how it can actually move up in the four focus areas mentioned and got this:
I did ask if cybersecurity isn’t a too tall order for the Philippines and got this:
HIT/HIM and Cybersecurity are very hard areas to break into as both require strong knowledge in fundamentals. A big risk is the gung-ho Philippine attitude to rush headlong without adequate preparation, which inevitably leads to smacking straight into an inprenetrable wall called “reality.” Obstacles can be surmounted with careful planning and tight execution.
The Indian IT progression was not to jump directly to “architect,” as amusingly some Indian resources assigned to me back in the day replied as their title when queried by me. They started off as “button pusher monkeys” tending to racks of server farms, QA technicians, and the IT equivalent of go-fers. Eventually the Indians branched into junior analyst roles, then senior analyst roles, project leads and project managers. Every software engineer graduate starts off as a no-name line coder who gets ordered around by those more experienced. One cannot be credibly trusted to manage others’ money and budgets without the requisite experience backed up by industry referrals, which the Indian IT industry built up remarkably fast in the early 2000s until now. India has many technology colleges and universities that pipeline directly into their consulting powerhouses. More experienced Indian consultants regularly go back and are offered visiting instructorships at those teaching institutions to train the next generation of Indian professionals. Being able to leverage prior experience cuts down the training time for each new batch, which is harder to do with gatekeeping culture.
thanks, I was wondering why ChatGPT saw HIT/HIM as easiest – funny I queried further re HIT/HIM and Financials and got the answer that financials are actually easier. So AI contradicts itself without batting an eyelash. It did tell me though that HIT/HIM providers already work in the Philippines, that surprised me. The question though is at what level Filipino employees of such firms work. I won’t ask AI though as it probably won’t really “know”.
Yes HIM can be something as simple as manual encoding of patient information from paper records into electronic form, which is the lowest level in HIM. Nowadays though platforms like Epic and healthcare providers/technicians inputting patient information directly into the EHR cuts out a lot of encoding work. Basically encoders are akin to what secretaries on “typing floors” in office buildings were back up until the 1970s. And we know what happened to those secretaries and typing floors. They were replaced by personal computers at every desk.
I guess figuring out how to move up the value ladder is something not many thinkers consider over there. The bottom of the value ladder is always the first to be replaced.
possibly the gatekeeping you mentioned is one thing preventing level up.
That gatekeeping is very often due to extreme lack of trust outside of the usual small cliques.
I wouldn’t say that gatekeeping is the behavior of low trust of outside groups. Rather gatekeeping is a behavior of mediocrity, because only mediocre people feel the need to hide knowledge they fell into by happenstance — which only works when they can control the flow of knowledge towards others. Even if the initial gatekeeped knowledge provided a large advantage gap eventually the knowledge would become outdated and less useful. Which seems to be a pattern in the Philippines of periods of injected knowledge followed by stagnancy then eventual falling behind.
On a personal note as about 6 months ago before my trips abroad I had advised contacts in Cebu who are in the BPO world that they should start formulating exit plans.
My advice is not because I believe AI to be transformative in the sense of being a creative tool; on the contrary AI’s transformative aspect is that it rapidly automates processes that have clear and defined parameters. Tier 1 CSA following a script is one such scenario that is clearly defined with tight constraints that disallow deviation from the support script. Increasingly in the last 5 years I’ve found even Tier 2 CS (“supervisors” and “leads”) are being constrained by the software tools, having power that allowed Tier 2 creatively solve customer problems taken away by tool limitations, with “overrides” no longer being an option even in manually submitted form. Tier 2 is now effectively a glorified facilitator to speed up CS queues to lower response times. The use of LLMs to hint at solutions probably isn’t going to be done as the trend has been towards the support tools being more constrained, not loosening constraints.
The problem with Philippine elites boasting and coasting on the “success” of BPO is a hard truth unacknowledged: The BPO industry, specifically in customer support, was created to stop a consumer backlash against Western-based agents being replaced by clunky Interactive Voice Response (IVR) systems that use pre-recorded touch-tone or voice prompts. As such BPO was always a stop-gap measure.
The hard truths is that BPO is an industry that can be parachuted in, set up with minimal capital expenditures (long-term physical assets), able to be packed up and moved to other countries with more favorite business climates, or have human agents replaced wholesale by software-based agents, just like human agents in cheaper labor climates replaced higher labor cost humans in US and European call centers. BPO as a “Philippines industry” was perhaps an illusion because it was never a Philippine industry to begin with. It is an instance of Filipinos working for a foreign company for day’s wages, and I disliked how the BPO industry was romanticized beyond that.
I had long advised friends that they should take advantage of BPO salaries to collect capital to invest into other things. Most did not take that advice, assuming the relatively young BPO industry to last forever. They bought expensive condos, took on one or two car loans, went on expensive vacations, spent their salaries only to wait for the next salary arrive. Only very few took on my advice and built small businesses catering to other Filipinos, or branched into independent VA work.
Now there is no shame in working for another. There is no shame in taking on a job because one lacked the basic skills to build something on one’s own self. But working for others also means exposure to more complicated processes that add value. One could ostensibly take those learnings and apply it into another area, i.e. innovation.
The other shoe to drop is if the Middle East gets embroiled into another regional sectarian war, or when oil sheikhs “run out of money” to pay out massive welfare programs that allow for imported domestic helpers and building projects that employ laborers, then what? What economic permeance would the Philippines have? The third leg of the economic stool that shakily holds up the Philippines consumption-based economy are remittances, which can take a dive in a global recession (which one can imagine is more likely during an age of realignment teetering on a new multi-theater world conflict). The only way is to proceed with building economic engines that are physically present on national territory. Factories, manufacturing, creating things.
https://x.com/pos2only/status/2025063330369732800 from the one who wrote the original article:
Not sure what he is referring to. Probably another post on Monday.
But yeah the Philippine economy is pretty much held up by the derivative effects of Middle Eastern OFW, BPO, and family remittances from the West. One leg falling out would be painful. I worry there is nonzero risk in all three legs falling out in the near future.
Check out the prompt “FDI per capita in US Dollars” for each MSEA and ISEA country. The results are sobering and the borderline boastful government press releases of “billions of pesos invested” no longer look great. The Philippines lost much of a big chance to have manufacturing roots planted in the last decades, and shockingly more so in the last 5 years.
PNoy was working on an FTA with the EU, something which his successor abandoned for “put@ng in@ng EU”. Well now according to ChatGPT this is the status:
Having an FTA or a CEPA does help in getting FDI from European countries, especially factories moving OUT of China.
P.S. I have observed that the Philippines usually tends to suck at partnerships, while often instinctively seeking a modern variant of the mandala system as in wanting a patron state.. which is why I guess Filipino officials often are a bit rude towards towards those not a present or potential patron state.
Re patron state or mandala: Manila before Legazpi had Brunei, but Rajah Sulayman quickly converted to Christianity from Islam when Legazpi won (a variant of how Senators and Congressmen join supermajorities nowadays) and the principalia signing up for being subjects of Philipp II (for him a feudal arrangement, for them probably recognizing him as a Rajah of Rajahs) while Bonifacio in his “Ang Dapat Mabatid ng Mga Tagalog” accused the Spanish of having not fullfilled their part of the deal, and Aguinaldo explicitly sought US protection in the Malolos Constitution’s preamble.. finally how quickly Philippine elites shifted to Japan and back in the 1940s, which fortunately didn’t work that totally with China in 2016..
Re rudeness towards non-patron states: how Manila looked for confrontation with Germany in the NAIA3 debacle (though someone with an inside track on BOTH sides told me that debacle was a perfect storm of Philippine unreliability and German arrogance), how Philippine diplomats made snide remarks about German partial sovereignty before unity or about Vietnamese on bikes in the 1990s, all that.
(even how Duterte put the Sokor Ambassador in a very edgy seating arrangement during their first meet in Davao, somehow “putting him in place”)
P.P.S. of course it also isn’t exactly conducive to long-term partnerships if foreign governments have the feeling they are dealing not with one state, but with a different rajah with whom deals have to be re-negotiated whenever there is a new President. That is yet another very deep topic.
As an extension to “modern mandala system,” after the elites gain new, powerful benefactors, they turn around to their own supporters and claim *they alone* did everything in a lower form of power display. CCLEX being funded, designed, and built by foreigners then claimed by the Dutertes as “this is what Duterte gave you” can be seen as an example of this behavior.
Another negotiating failure of the Philippines is thinking there is leverage in something the Philippines does not have leverage in (e.g. equal partnership) while not recognizing the immense leverage the Philippines does have (e.g. available, relatively cheap labor).
Stability also requires continuity. Continuity requires a national ideology that is at least shared in large part between different parties that is distinct from partisan ideology. The pursuit of power for power’s sake is a relatively weak ideology, which I see in the constantly reconfiguring of Philippine political “coalitions” — coalitions that seem to me at least to simply be temporary alliances of dynastic and business interests in order to gain power. Temporary convenience does not translate well into permeance, except maybe the permeance of the temporal.