Arroyo’s Price Caps Further Expose ‘Greed’ of Oil Firms, Underscore Need to Repeal Oil Deregulation Law


MANILA — Protests this week against the Big 3 oil companies’ “greed for super-profits” occurred almost on a daily basis in the Philippines. On Wednesday, members of Piston, a nationwide association of drivers and operators, drove a protest caravan to the headquarters of the Big 3 oil companies in Makati City to protest its “mafia-like scheme of feigning oil shortage.”

A day before in Davao City, hundreds of protesting drivers slammed the “staged war” between the Big 3 and Malacañang over the selective and temporary oil-price freeze imposed by Executive Order 839, which President Gloria Macapagal-Arroyo issued last month freezing oil prices at Oct. 15 levels. On Thursday a thousand delegates of Anakpawis partylist capped its national convention with a night rally in Quezon City to protest the oil companies’ “excuse” of an impending oil shortage and warnings of huge increases once the EO 839 was lifted. All protesting groups vowed to hold more protest actions against the oil companies in the future.

As of this writing, EO 839 remains in force in typhoon-ravaged parts of Luzon until the president lifts the EO, which she promised to do on Monday. Despite its limitations, Big Business groups in the Philippines, including pro-business think-tanks, have been irked by the price caps and have been lobbying to have it lifted. Fearing the price caps have set a dangerous precedent to its business, Shell even filed a case in court against the EO 839.

So now there are conflicting pressures from Filipinos to moderate, as the critics put it, the oil companies’ greed while Big Business and its friends in government are busy trying to protect their expected rates of profit.

Relief Needed in Crisis

According to Bayan Muna Representative Neri Colmenares, it is unlikely for Shell’s case against EO 839 to prosper because the government has legal grounds to impose price caps. Though it is not expressly stated in law that the government has the power to impose price controls considering the oil industry is deregulated, Colmenares said the state has inherent police power, plus the fact that the conditions warrant the imposition of price controls.

But “Arroyo doesn’t have to do that if she had supported the bill repealing Oil Deregulation Law,” Colmenares told Bulatlat. The progressive partylists’ bill seeking to repeal oil deregulation law has been pending in Congress since 2001.

Because of the Oil Deregulation Law, Arroyo now “has to resort to police power to control oil prices.” But how sincere is she at it? Colmenares asked.

EO 839 appears to be mainly a public-relations tactic to divert attention from government’s culpability in the human disasters wrought by the recent typhoon-driven calamities. It also appears to be an attempt to correct government’s image as unduly siding with the big oil firms at the expense of the Filipino public,” Ibon, a non-profit think tank, said in a statement.

If Arroyo is truly sincere in giving the people relief from price hikes, “she should put her money where her mouth is,” Colmenares said. Arroyo is powerful in Congress, he pointed out. “She and her relatives and followers in Congress could have approved our bill repealing the oil deregulation law, but they didn’t.”

Colmenares added that as long as Arroyo is trying to provide relief, she might as well impose a price cap, too, in the recent rate increases of Meralco.

Asked if the case filed by Shell against Arroyo’s EO 839 is just a “staged war,” Colmenares replied that “you cannot rule anything out with Arroyo,” whose decisions are largely “transactional.”

The case filed by Shell, among other brickbat being thrown Arroyo’s way by Big Business and its think tanks, might even lend her a graceful exit from price controls, he added.

No Moderation of Greed Under Deregulation?

Because of EO 839, some of the smaller oil firms have reportedly either curbed or withheld oil importation. Unlike the big oil companies, small oil companies said they could not incur losses — meaning that, unlike the big companies, they could not absorb big foregone earnings.

But the big oil companies refused to cover the potential shortfall in supply, even if they have the means to do so. Petron Corporation, Pilipinas Shell, Chevron Philippines (Caltex), and Total Philippines maintain an inventory of as high as 45 days. They also have long-term supply contracts with parent companies abroad. As they control more than 87 percent of the Philippine market, they are in a position to manipulate supply and create an artificial shortage, according to the umbrella group Bayan in a statement.

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