How can we stop oil companies from profiteering?

By BENJIE OLIVEROS
Bulatlat.com

Oil companies increased pump prices again. This is the eighth oil price hike since the beginning of the year alone, amounting to a net increase of P6.75 ($0.16) per liter for gasoline and P6.50 ($0.15) for diesel. This would bring the prices of oil products in the country near its peak of P60 ($1.40) per liter in 2008 when the price per barrel of oil was at $147 and speculators were projecting (or wishing) that it would reach $200.

The following is a table, which tracked gasoline prices in the Philippine, published by www.alternat1ve.com.

The problem is between June and July 2008, when pump prices reached its peak, the price per barrel then was $147. Now WTI crude is being traded at $107.96 and Brent crude oil is at $124.17, still below its 2008 peak. At Mean of Platts Singapore, gasoline is at $120.74 per barrel while diesel is at $129.50. So if we are to follow the formula that was being used by oil companies before, a P1-per-liter hike for every $3 per barrel increase, by the time the price per barrel goes up to $147, the price per liter of gasoline will be way past the P60.46 peak, around P5 ($0.12) more. And to think, the 2008 pump prices were already overpriced by 60 percent and the dollar to peso exchange rate was higher by $1.

Of course, oil firms claim that they are no longer using any specific formula, perhaps to hide their profiteering ways.

What is infuriating is that, as I have mentioned in my most recent analysis “The invisible hand of monopolies,” there is no concrete justification for doing so: there is neither a supply nor a demand shock. And there is no increase in production costs. Prices should even be lower because of low demand, and the increase in production capacities of oil companies should have also brought prices down.

What is even more infuriating is that not only is the Aquino government not doing something to put a stop to the profiteering ways of giant oil companies, it is even justifying these baseless, oppressive oil price increases. Why? Because for every price increase, the Aquino government is earning more through its VAT on oil, which is a percentage of sales.

So we could not rely on anybody but ourselves. In the US, the continuing oil price hike is becoming an election issue being exploited to the hilt by the Republicans to gain back the White House. We, for no other reason but for our survival, should, all the more, make this a fighting issue. Because if we are just going to allow these giant oil companies take advantage of us, there is no limit to their greed for profits. They would push us deeper into poverty. So the time to act is now and we should not merely whimper, we should raise hell.