By IBON Foundation
Global oil prices are reaching record highs not because of unmanageable factors. In reality, giant transnational oil corporations that exert monopoly control over the global oil industry have the capacity to bring down oil prices.
Super companies like Exxon Mobil (US), Chevron Texaco (US), Royal Dutch Shell (Britain-Netherlands), British Petroleum (Britain), Total (France), and Conoco Phillips (US) intensely dominate and control the upstream to the downstream levels of the global oil industry, making them invulnerable to external factors that may affect prices. Such position allows them to dictate the price with which they want to sell their products.
Dubai crude, for instance, is overpriced by US$18-20 per barrel, which represent windfall profits for the super companies that control oil. Theoretically thus world crude prices can be slashed by about the said amount, substantially bringing down pump prices in downstream markets.
But with world crude prices showing no signs of stabilizing, the Arroyo administration should do more than delaying the implementation of the petroleum tax hike to counter the profiteering of the oil giants. Government must now design and at once implement a set of contingency measures to soften the impact of impending drastic increases in oil prices on ordinary consumers as well as the national economy.
IBON urges the Arroyo administration to consider the following actions:
1. Suspend the implementation of the oil deregulation law.
2. Institute a ‘price control mechanism’ on socially sensitive petroleum products like diesel, gasoline, and liquefied petroleum gas (LPG).
3. Require the oil companies to disclose their inventory to determine how much oil they have and at what price did they purchase it.
The suspension of the oil deregulation law gives an opportunity for policy makers and economic managers to rethink the deregulation policy and to look for a viable alternative. Deregulation merely allowed huge foreign oil companies and their local subsidiaries (like Shell, Caltex, and Petron) to further monopolize the Philippine oil market and impose unreasonable prices.