Bearing the brunt of neoliberal policies

Bulatlat perspective

Prices of oil products and LPG have been increasing monthly this last quarter. The latest increase in LPG was the heftiest, jacking up prices by P140 – P157 ($3.18 to $3.56) per 11-cylinder tank. Also electricity rates would increase by P4.14 ($0.09) per kWh or an additional of P830 ($18.86) per month for those consuming 200 kWh purportedly because of the maintenance shutdown of Malampaya pipeline and other power plants.

This propensity of oil companies and the power distributor and producers to raise prices could be attributed to the deregulation of the oil industry through the Downstream Oil Industry Deregulation Law of 1998 and the privatization and deregulation of the power industry through the Electric Power Industry Reform Act of 2001 (EPIRA). These laws, which are consistent with the neoliberal policies of privatization, deregulation and liberalization, have brought nothing but hardships for the Filipino people. It has been so abused that the Department of Energy promised to review these laws again last August 2013, even before the hefty price adjustments of late. (Previous reviews, as expected, merely reaffirmed these laws.)

The Oil Deregulation Law, which was touted to strengthen the market by bringing in more oil producers and distributors purportedly to bring down prices, has, instead, enabled the oil cartel to raise the prices of oil products at will. Oil companies have been pretending to base its prices on the movement of prices in international oil trading – even as the oil trading in the international market is marred by speculation and price manipulation – but have been quick in raising prices and always slow in lowering prices, and the result is always a net increase in prices. According to the Oil Monitor report of the Department of Energy (DoE) after the prices of oil products were increased recently, December 3, gasoline and diesel had a net increase of P2.04 and P4.08 ($0.046 to $0.09) per liter, respectively, compared to last year. LPG had a net increase of P13.93/kg ($0.32). And this has been going on since 1998. Citing the oil price monitor of the DoE, the Makabayan bloc, in laying the basis for the repeal of the Oil Deregulation Law, said that from 2009-2011, unleaded gasoline prices in Metro Manila increased from P36.16 ($0.82) per liter to P54.29 ($1.23) per liter, while diesel prices rose from P28.23 ($0.64) to P44.32 ($1) per liter. In the Visayas and Mindanao, prices are even higher.

The EPIRA, on the other hand, which was supposed to bring in more investments in power distribution and production purportedly to make the delivery of electricity more efficient and bring down power rates has resulted in questionable contracts with power producers – where the amount of power produced and not only those consumed are being charged to consumers – and has enabled the monopolistic power distributor Meralco to raise rates at will and to charge even its recreational expenses to consumers. Meralco has more than once been caught overcharging consumers. Worse, in an act of extreme callousness, it has announced that it will charge the costs of restoring electricity in areas hit by Typhoon Yolanda to the poor survivors in Leyte, Samar, Panay island and other provinces devastated by the super typhoon.

When these laws were being rammed through, progressive groups protested and warned the people that these would bring nothing but higher prices and hardships for the Filipino people. This is what is happening now.

In January, things will get even worse as LRT/MRT fares would also be increased.

Whenever labor groups ask for an increase in the minimum wage, the government immediately rejects it saying that it would bring about an increase in prices as companies would be compelled to pass this on to consumers. Of course this is an utter falsehood as capitalists earn infinitely more from each worker than the wages they pay. In fact, before hiring a worker or employee, they would already project how much their sales and profits should and would increase. Wages do not even factor in in the computation of prices of commodities. An increase in wages only brings about a lowering of profits of companies and would have no effect on prices of commodities and services.

However, an increase in prices of oil products and electricity rates would definitely have an impact on prices. Power accounts for around 40 percent of production costs. An increase in oil prices, on the other hand, would not only increase production costs but transport costs as well. So how come the government does not stop oil and power companies from increasing prices and rates?

The government says it could not do anything about it because we are under a deregulated environment. It tries to appease the people by saying that these laws would be reviewed while, at the same time, warning against price regulation. This is a lot of bull. It is man who made these laws and not God. The critical question is: Would the government sacrifice the profits of corporations to protect the interests of the Filipino people? Without public pressure, this is high unlikely because aside from the fact that the government also profits from these spike in prices, through the EVAT, it is already quite clear who the “boss” of the Aquino government is. Just think: the economy is supposedly growing, posting a 7 percent growth in the third quarter of 2013, but has there been improvements in the lives of the majority or has it become harder? (

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